SOROSOROS

SOROSIAN Liquidity - We Had Better Pray For Rain

2009-02-07T09:16:00.000-08:00

The main legislative intent of the U.S. Congress in passing the $700 billion “bailout” bill on October 3, 2008 was to have the Secretary Treasurer set up of a troubled asset relief program to purchase and quarantine so-called toxic assets of private companies in a government-created asset management company, somewhat similar to the Resolution Trust Corporation that had been partially successful in disposing of troubled real estate assets taken over from liquidated savings-and-loan companies in the 80s:
“The Secretary is authorized to establish the Troubled Asset Relief Program (or ‘‘TARP’’) to purchase, and to make and fund commitments to purchase, troubled assets from any financial institution, on such terms and conditions as are determined by the Secretary, and in accordance with this Act and the policies and procedures developed and published by the Secretary.”
The general purpose of the Act was so broadly written that it did not preclude any other course of action; the Secretary of the Treasury was practically given a blank check to do with whatever he deemed necessary:
“The purposes of this Act are to immediately provide authority and facilities that the Secretary of the Treasury can use to restore liquidity and stability to the financial system of the United States….”
Congress had balked at passing the first version of the bill because it gave Henry Paulson a blank check somewhat similar to the one given to the President for the pre-emptive destruction of Iraq’s sovereign government, therefore it is indeed astounding that a Democratic Congress finally gave the Republican President’s treasury secretary so much discretion in the lengthy emergency bill abruptly passed, which included a tax exemption for children’s wooden arrows. Mr. Paulson’s use of the blank check has given foolhardy Congress cause to think that the august body had gotten it right in the first place, when the first bill was defeated.
Only ten days after TARP was approved, Treasury Secretary Henry Paulson changed course: he put the original TARP plan, to take toxic assets off the banks’ hands, on the bank burner in favor of the very “capital injection” plan that he had formerly opposed. Columnist Paul Krugman of the New York Times, best known for his ideological ranting against everything the Bush Administration did, quotes Mr. Paulson as saying that capital injection “is what you do when you have failure.” Mr. Paulson told Congress that “the right way to do this is not going around and using guarantees or injecting capital,” and referred to Japan’s limited success with such an approach in the 90s. But Mr. Paulson did an abrupt about face – detractors allege that his hand was forced by the adoption of capital injection overseas. And according to a February 6, 2009 New York Times article, he stands charged by TARP watchdogs of deception in the expenditure of nearly $300 billion to bolster not only banks but automakers as well in exchange for preferred shares and warrants issued by those firms: Congressman Daniel K. Akaka of Hawaii said the program had “proceeded in a chaotic, unorganized and ad hoc manner.” Watchdog Neil M. Borofsky’s office is now focusing on “criminal investigations.” Watchdog Elizabeth Warren claims there is a “shortfall of about $78 billion: Treasury put about $254 billion into financial institutions in 2008, but got only $176 billion in value.”
Again, the Troubled Asset Relief Program Act gave Mr. Paulson virtually dictatorial authority, not only to purchase troubled residential and commercial mortgage-backed securities, but any other “instrument” related to same, such as equity shares, and warrants to buy equity shares, in the institutions holding the toxic assets; or, for that matter, anything at all that he deemed necessary to promote financial stability, as per this clause of the Act that Congress and the President hastily signed off on:
“The term ‘’troubled assets’ means residential or commercial mortgages and any securities, obligations, or other instruments that are based on or related to such mortgages, that in each case was originated or issued on or before March 14, 2008, the purchase of which the Secretary determines promotes financial market stability; and any other financial instrument that the Secretary, after consultation with the Chairman of the Board of Governors of the Federal Reserve System, determines the purchase of which is necessary to promote financial market stability, but only upon transmittal of such determination, in writing, to the appropriate committees of Congress.” (underlining added)
Mr. Paulson commitment of $250 billion to the direct capital “injection” course was a tactic that had been previously recommended to the world’s power elite by multi-billionaire George Soros – journalists must always mention the foremost financial alchemist’s billions because, much to his own chagrin, the good fortune of a man makes him credible wherever money is regarded as the greatest good no matter how it has been gotten or how badly it is put to use. Mr. Soros picked up some arbitraging techniques in his youth in London, moved to America and made billions operating a hedge fund. A former refugee from fascism and communism, the brilliant quantum-leaper is now a prominent fallibilist philosopher, liberal political philanthropist, and influential stealth statesman. Mr. Soros did his best to help defeat President Bush’s second presidential campaign because he perceived that the Bush Administration posed a clear and danger to freedom and social justice. He is said to have considerable influence on Barrack Obama, and has been accused by conspiracy theorists of buying the entire Democratic Party, lock, stock, and barrel. His right-winged critics call him a “leftist” or “socialist”, their dirty word for communist; and fascist Jews, under the sway of ‘groundless’ or self-hatred, call him a Jewish Jew-hater.
Members of the middle class could care less whether their savior is on their right or left side, or in heaven or on Earth, now that their Golden Ass is in a sling and nobody seems to know their right foot from the left. It is almost as difficult to define whether one is a true conservative or a liberal today as to know for certain whether a Judeo-Christian is really Jewish or Christian, or, for matter, if iconoclastic Muslims who reject idolatry and Jesus as God incarnate are better Jews than Jews – even conservatives would like to be liberated from something or the other. And the degree of orientalism of the occident is subject to much dispute, as is the definite difference between mind and body or firmament and fundament (whereupon man makes an ass of himself). A person cannot be just another human being or man in common: he must naturally make distinctions and beg to differ to be somebody different than others and what he really is; and he, thinking that such disagreement makes him whole, takes too much pride in his schisms. Of course the opposing arguments keeps the milling wheel rolling, but whether it spins in place or progresses, as it crushes skulls in turns, is another subject of debate. However that might be, the fact that even market fundamentalists – they draw an imaginary line between economics and politics, between their very own legs – are running scared to mama and recommending massive government dispensations, reveals that they have, like the rest of the two-faced race, two sides to their nature, a natural ambiguity that apocalypses make most obvious. There is nothing better than a crisis for the revelation of our underlying, critical crisis, our hypo-crisy in behaving as if we and our securities were better than we and our derivatives really are – wherefore we look to absolute power for the elusive unity in which we hope we shall be saved from the unwanted consequences of our relative dissensions.
Mr. Soros described his capital injection concept in an editorial published by The Financial Times on October 1, 2008: He said the original TARP plan idea was “fraught with difficulties. The toxic securities in question are not homogenous and in any auction process the sellers are liable to dump the dregs on to the government fund. Moreover, the scheme addresses only one half of the underlying problem – the lack of credit availability. It does very little to enable house owners to meet their mortgage obligations.” Direct capital injection is the way to go: “If TARP invested in preference shares with warrants attached, private investors, including me, would jump at the opportunity.” And that is what Mr. Paulson eventually did.
Whether or not Mr. Soros bought shares in the banks that received the Paulsonian injections is unknown to this writer, but more recently, seven groups of investors, including Mr. Soros and billionaires Michael Dell and J. Christopher Flowers, purchased the failed bank IndyMac for $13.9 billion dollars. As part of the deal, the investors agreed to put up $1.3 billion in new capital and to absorb 20% of the bank’s loan losses – the FDIC will absorb the rest, and expects the federal insurance fund to lose from $8.5 to $9.4 billion. Incidentally, smaller investors may want to start a brand new bank free of such burdens; they would not inherit an established operation with a large customer base but they might be more profitable, operating in communities where they know their customers well.
Notably, the investment hedge funds that bought IndyMac include several former partners at Goldman Sachs, one of the investment banking firms that was instrumental in causing the financial crisis. People love money hence influential members of opposing parties may wind up bedfellows in our circulating society. Secretary Treasurer Henry Paulson – whom Mr. Soros makes out to be a complete fool as far as his bailout policies go – made his huge fortune at Goldman Sachs, and like a good corporatist leader went through the revolving private/public door to save the investment firm while failing its major competitor. “Commissar” Paulson brought so many Goldman Sachs through the revolving door that the bailout program is said to be run by “Government Sachs.” Since almost everyone was on the deregulation and money grubbing gravy train, Democrats as well as Republicans can be blamed for its derailment. Jim Rogers, who was Mr. Soros’ partner at Quantum, notes that Obama appointees Timothy Geithner and Larry Summers were wrong for 15 years, and that Mr. Geithner was instrumental in botching the handling of the current crisis. Rumor now has it that Mr. Summers might take over the chair of the Federal Reserve Board of Governors from Depression-era buff Ben Bernanke.
Mr. Soros explained to the Financial Times that funds injected at the equity level are twelve times more powerful than funds used to buy assets off the balance sheet, hence the $700 billion would result in $8.4 trillion in credit fuel. Such is the alchemy of bank finance that he claimed that less than $500 billion of public funds would be sufficient to recapitalize the banking system.
According to a September 26, 2008 Reuters report filed by Anne Penketh, British Prime Gordon Brown strongly supported the original TARP plan, to buy up and sequester bad loans, during his visit to the United Nations in September: “Mr. Brown, speaking outside the UN, said that he had been consulting Wall Street financiers and government leaders from all continents in New York in order to ‘back up the action’ President Bush is taking.” His support of that action reportedly brought him into conflict with George Soros at a breakfast the day before.
But it was Mr. Brown who eventually took credit for Mr. Soros’ brilliant capital-injection idea, as witnessed by an October 15, 2008 article in the New York Times entitled: “British Prime Minister’s Stock Rises as His Bank Plan Lifts Stocks Worldwide.” We learn that Mr. Brown, “after devising a bank rescue plan that has now been endorsed by European and American officials…he is being celebrated worldwide and has revived a political career…. And forgetting for the moment his past enthusiasm for the free-wheeling global capitalism championed by Alan Greenspan, the Federal Reserve chairman whom Mr. Brown has called a mentor, he took full credit where he seemed to feel credit was due…. Not to mention the United States, he added, saying that he would soon speak to President Bush, who went on television Tuesday morning to endorse a remarkably similar plan from his Treasury Secretary Henry M. Paulson, Jr.” That led Mr. Krugman to pose the question, “Has Gordon Brown, the British prime minister, saved the world financial system?”
We may rejoice that what is good for the world is good as well for the messiah who recommends it, and that the motherland was thereby able to look down on its wayward progeny across the pond instead of having the British prime minister pose as the American president’s lapdog. Yet the salve of the salvation was to the best of our knowledge concocted by George Soros. Not that Mr. Brown is a devious and vain politician who plagiarized Mr. Soros’ recommendation. Brilliant ideas have mystically appeared in many heads around the world at about the same time, perhaps secretly implanted by Madame Blavatsky’s Great Masters if not by extra-sensory perception. And then there is the usual grapevine. As for giving and taking credits due, sometimes we do hear or read about something and forget its source, then claim it as our own creation: we recall how Helen Keller as a young girl was accused of plagiarizing a fairy tale, and had the prize she had won for her story taken away from her over the vigorous defense raised by Mark Twain and Alexander Graham Bell. In any case, we should give some credit to U.S. Senator Maria Cantwell, for one, who voted against the original bailout plan with its intended TARP, advocating capital injection instead. U.S. Representative Paul Hodes had consulted with Mr. Soros before twice voting against the bill. Mr. Krugman claimed that besides Mr. Soros, he and economists Nouriel Roubini and Brad DeLong had long favored the capital injection plan – Mr. Brown had simply carried the spear.
Maybe it does not matter who was first in this case, but we think so because we want geniuses at the apex of the money pyramid; we need real money magicians and alchemists now instead of charlatans. There is always a lot of magic to money. Economists have written long tracts on such subjects as the difference between money and credit, but they cannot clearly distinguish the difference. The dollar is clearly marked as a “note”, and the other side of a demand deposit liability in the bank is a debt asset – new money is created when banks make loans. Most of us know very little about financial alchemy; how something might come of nothing; how dross might be converted to gold, is a mystery to us, better left in the hands of the high priests of finance initiated into the Arcanum. When the magicians’ sleights-of-hand periodically falter, the public loses confidence in the symbols on the backside of the dollar; the omniscient eternal eye on the financial pyramid scheme, the imperial eagle clutching the fasces of war and peace, and the motto, “In God We Trust One Dollar.” So we barely understand the capital injection solution Mr. Soros offered and Mr. Paulson bought as a medicine for the financial disease.
Instead of mopping up the highly over-rated junk mortgage mess and wringing it into a slop bucket for rehabilitation and eventual sale, it was thought best for the government to use $250 billion to buy shares in the troubled institutions. If liquidity and capital were the problem, why waste time fooling around with a risky asset management company when the government could kill two birds with one stone by buying shares in the banks, thus debiting cash on the balance sheet to raise the value of assets, and crediting capital to raise the value of that net account as well. The toxic assets would remain on the balance sheet at their marked-to-market value in accordance with FASB Rule 157, a rule that editorialist Steve Forbes called “asinine” because, if the whole truth were told, every bank would be insolvent. If those assets were not as toxic in the future as presently perceived, the banks would get the appreciation in their value.
The government carried out the injections over taxpayers’ heads, and many of them were screaming bloody murder at the outset of 2009. The Sorosian plan is apparently not working because the badly burned banks are reportedly hoarding the money instead of loaning it out. The economy is radically reeling, so why throw good money after bad? Maybe the value of the bank assets will further diminish as the situation worsens, further cutting into the banks’ capital, so it might be better to hang on during the storm and wait for the Sun to shine once again. After all, consumers are hoarding their money as well, making the recession worse, although a net increase in savings would be deeply appreciated by financiers because savings is the major source of funds for investment.
On the other hand, we have an often quoted and debated Celent report that the banks were in fact loaning out more money than ever, and that government officials are apparently relying on limited sources of information to the contrary, sources that they refuse to disclose. Experts say that the increases were only temporary, that companies were taking down their credit lines lest they lose them. Other analysts insist that new loans, even for real estate, were at record highs. But local businesses say they cannot get loans and that the lack of available credit is killing them.
In sum, despite all the professional data collection services and analysts in the world, nobody seems to know exactly what is going on. The government has at one point refused to disclose what they are doing with the bailout money, presumably for the reason that, if people know exactly which banks are not getting capital injections, they might make a run on those banks and put the withdrawn funds into the government-backed banks. Furthermore, we hear that the government refuses to disclose information about a mysterious program going on behind the scenes involving over a trillion dollars in advances to troubled institutions. An Associated Press report states that “we may never know whether the government’s $700 billion bailout worked according to a new report from congressional auditors.” The January 30, 2009 GAO report said that too many programs were involved to sort out cause and effects, and that more information was needed about the division and use of the bailout funds in order to ascertain the effectiveness of the recovery plan or the lack thereof. An earlier GAO report had already blasted the lack of transparency or opacity of the bailout program.
That is not to say that Mr. Soros’ capital injection notion was a bad idea – he did not say it was a quick fix, and he still seems to be pushing it. We cannot really say because we don’t know what is going on. The jury is still out, and is asking questions of the public money managers, many of whom came through the revolving door to save the very outfits they worked for. The jury foreman hopes Mr. Obama and his experts who helped create the crisis will deliver on his promise for transparency. But stalwart holdouts, who think nothing worthwhile can be done democratically because factions are bound to bicker ad infinitum over the dirty details, claim that bank operations should be clothed in secrecy; indeed, perhaps it was Federal Reserve Board Chairman Ben Bernanke’s new transparency policy that initially panicked the financial markets, not to mention the interest rate hikes designed to take away the punchbowl his irrationally exuberant predecessor had laid out for Wall Street’s drunken party.
The Federal Reserve Act of 1913, as we know, was a Congressional reaction to the 1907 panic. The House Banking and Currency Committee held hearings in 1912 and determined that America’s financial system was in the hands of a “money trust… an established and well defined identity and community of interest between a few leaders of finance . . .which has resulted in a vast and growing concentration of control of money and credit in the hands of a comparatively few men." What’s new? The nation, including its financial branch, is still owned by the “money trust,” and that trust makes a great deal of money on the opportunities provided by volatility – buy low, sell high. In one of the greatest paradoxes of all times, the financial branch of government designed to flatten out the boom and bust cycles to save the nation from the financial calamity of busts actually contributed to the boom of the 20s and bust of the 30s. According to the market fundamentalist, monetarist-economics tale cited by Mr. Bernanke in his March 2, 2004 remarks at Washington and Lee University, the Fed inflated the money supply in the 20s and then unnecessarily began to hike interest rates. This expansion and contraction of the money supply upset the apple cart. Many of the local banks, instead of taking measures to save themselves, hoarded money the best they could and waited for the new central bank to set policy. Instead of providing liquidity to the system, the central bank hoarded money and allowed many banks to fail. Herbert Hoover concluded that “the Reserve Board was indeed a weak reed for the nation to lean on in time of trouble.”
Mr. Bernanke attributed the severity of the Great Depression to the early reliance on the rigid gold standard. The countries that abandoned it in favor of monetary flexibility fared better. Even so, market fundamentalist extremists are effusing on the relative value of glittering gold during the greatest crisis since the Great Depression. Steve Forbes, for example, in the February 16, 2009 issue of Forbes, bemoans the indefinite definitions of money supply, and rues the inflationary policies of Mssrs. Greenspan and Bernanke. He thinks the Fed should look to the price of gold to determine its monetary policy: “If it moves outside a certain narrow range, the monetary authorities should react by either tightening or loosening the money supply.” Market fundamentalists blame Mr. Roosevelt’s New Deal for prolonging the Great Depression – they claim that countries that did not resort to massive recovery plans pulled out much sooner than the United States. After learning so many lessons from the Great Depression, Mr. Bernanke still hiked rates himself, purportedly unnecessarily, some time after his predecessor’s hands-off approach led to the Dot.com Boom and the Real Estate Credit Boom. But when the credit crunch became all too obvious, he was determined by his interpretation of the Great Depression to curb the violent contraction with buckets and buckets of liquidity, but not enough liquidity as far as Mr. Soros is concerned.
Although Mr. Soros now says that the amount of taxpayer money required for recovery is too big for the political will to handle, he is still harping on his pet liquidity notion, which he apparently thinks Henry Paulson badly botched, hence the believes the banks need recapitalization on a stupendous scale; $1.5 trillion dollars instead of the less than $500 billion he had previously said would do the levitation trick. Reuters Television quoted him at the World Economic Forum on January 26: “They need a thorough reorganization of the mortgage system, and you have to replenish the equity in the banks. That would require an injection of about a trillion and a half dollars – much more than if they had done it previously under the TARP.”
Mr. Soros claims that the ad hoc salvation programs have been much too little and far too late; the first half of the TARP funds was haphazardly and capriciously distributed; therefore the economy is virtually doomed. He has been prophesying doom for some time; if anyone consistently predicts a severe downturn in the general business cycle, he will be regularly be proven correct, albeit less frequently if regulation can gradually raise the troughs and flatten the peaks. His pessimism is making him richer while other hedge funds are losing bundles. This time Mr. Soros’ dire forecast might be right. We hope not. And we hope he himself hopes his prophecy is wrong, or will be made wrong because it will be heeded and appropriate action taken to avert disaster. If he can outlive the global calamity, he will probably be the first optimist to scoop up on the upturn.
In an October 18, 2008 interview published by the Bangkok Post, Nathan Gardels, the editor of Global Viewpoint, asked Mr. Soros why all the efforts of the U.S. government had not stemmed the financial and economic crisis. Mr. Soros implied that the efforts had not worked because of the tardy response of the U.S. authorities who had bought into the fallacious market fundamentalist ideology. Mr. Paulson responded to emergencies on an ad hoc basis, Mr. Soros recounted, and then came up with a $700 billion plan to put money in the wrong place. But the U.S. government has “finally came around, with the government buying equity stakes in banks because they see the financial system is on the verge of collapse.” But on January 28 of the next year, CNBC quoted him as saying the first half of the $700 expended by the Bush Administration has been “wasted”; since that half included the capital injection he had urged, we sense his antipathy towards the previous administration causes him to contradict himself.
Besides, “recapitalizing the banking system by buying equity stakes in the banks,” prescribed Mr. Soros, there must be interbank loan guarantees, and the London Libor and U.S. Fed rates must be aligned, which he said was being done. A safety net must be provided to European banks to prop up the Euro. And the U.S. mortgage system must be reformed “so that mortgages are not worth more than houses.”
That sort of mortgage reform, with mortgages being written down to the fair market value of the collateral, with the banks and the government sharing the costs of the write down, is seldom mentioned by public officials, but it has been publicly advocated in the U.S. by failed banker and free-enterprise professor Charles Calomiris, who, in an October 14, 2008 Forbes Magazine article entitled ‘How To Prevent Foreclosures’ cited Mexico’s El Punto Final (final point or last chance) program as a successful example. But in an academic paper (‘A Taxonomy of Financial Crisis Resolution Mechanisms: Cross-Country Experience’, World Bank Policy Research Working Paper 3379, August 2004) Mr. Calomiris authored with scholars Daniela Klingebiel and Luc Laeven, certain doubts were raised: "It is difficult to assess the effectiveness of the Punto Final program, not least because it was preceded by, and coincided with, numerous other financial support and debtor relief programs. After all, the Punto Final program, as its name indicates, was intended to finalize the bailout of the banking sector and the debtor relief program in Mexico. There were also other positive developments: growth, increased banking sector income, and foreign entry into banking, which improved the condition of banks and the supply of credit during this period. Nevertheless, despite the difficulties of attribution, we note that the banking system did show some improvements in indicators of asset quality, profitability, and capital adequacy during the years 1997-2000, and that Punto Final may have played a role in those improvements....”
Mr. Soros also supports a sort of steady-drip infusion of capital as a solution, from a central pool into the veins of sick countries throughout the globe. He said that “the IMF must deal with the vulnerability of countries at the periphery of the global financial system by providing a financial safety net. This is also in the works. The Japanese have already offered $200 billion for this purpose.” (Underlining supplied). That underlined “must” stems from his sense of injustice. In the absence of social justice on a global scale, globalization, which can be a good thing, must fail. Indeed, all civilizations and nations must fail unless justice is done. A Greek myth claims that almost everyone is naturally endowed with a sense of justice, and that adults who do not have it should be put to death. Taking our cue from the American jurist Edmond Cahn, we speak of the sense of injustice rather than the sense of justice, for justice is ill-defined except through bad feelings of its absence. Countless tomes have been written in attempts to define justice in itself, but we know right away, even as children, when some injustice has been done to us. For instance, our sense of injustice is aroused when we are not treated equally and deservedly in accordance with out human dignity.
Now it has been offered, by those who would separate politics from economics, that the provision of equal political justice under the law, so that all persons are treated the same by the authorities and get their just deserts regardless of their rank or status, is one thing, and that economic justice, that everyone get the things they deserve, is quite another, for some people deserve more than others, and a few deserve much more than the many. But the many may claim that necessary goods are equally deserved by all human beings; food, shelter, and health care. And everyone, no matter how “peripheral”, should be afforded the dignity all humans equally deserve, instead of being exploited like slaves.
Mr. Soros advocates “social justice”, and by that he means political-economic justice, wherefore a number of his privileged critics, many of whom prefer the hierarchical, authoritarian order of corporatism hence are sometimes called fascists, refer to him as a frustrated socialist whose justice, instead of liberating people, would actually condemn the masses to totalitarian serfdom. Yet, despite his support of pot-smoking homosexuals and the like libertines, and being characterized by fundamentalist preachers as the Devil incarnate, he is actually somewhere in the middle of the secular spectrum, between communism and fascism, revolution and reaction – as we know, he posed as a Christian and survived the battle between the Nazis and the Communists over Budapest.
In his book, The Bubble of American Supremacy, Mr. Soros outlined the social injustice of the current globalization scheme, which, he wrote, has its origins in the absurd market fundamentalist undertaking spearheaded by Margaret Thatcher and Ronald Reagan when they took power in 1980. The main idea was to reduce state interference in the global economy so the Invisible Hand could miraculously bring the markets into utopian equilibrium – there is no such thing, the atheistic Mr. Soros insists. Leading neo-imperialist countries, embarking on a new phase of economic colonization, and amply endowed by the first world’s main financial centers, naturally grabbed the advantage and roundly exploited weaker countries about globe.
Mind you that Mr. Soros approves of globalization but only to the extent that the winners compensate the losers. He swears that markets on their own are incompetent when it comes to “taking care of collective needs, of ensuring social justice. ‘Public goods’ can only be provided by a political process. Globalization has severely impaired the capacity of the state to provide public goods for its citizens by interfering with the most convenient and copious source of revenues, mainly taxation of incomes and profits….. As a result, the welfare state cannot be preserved…. Collective needs and social justice received short shrift because the development of the international institutions that would be necessary for their promotion has not kept pace with the development of the markets…. Globalization has favored the pursuit of profit and the accumulation of wealth over the provision of public goods…. There is a growing inequality between rich and poor…. The trouble is that the winners do not compensate the losers either within states or between states…. Countries at the center of the global capitalist system enjoy far too many advantages over countries at the periphery. Perhaps their greatest advantage is that they can borrow in their own currencies. This allows them to engage in counter-cyclical tendencies, that is, they can lower interest rates and raise government expenditures to fight recessions.”
The United States is still king of the mountain. Despite the financial calamity in the United States and the fundamentalist clamors for golden pegs, the dollar remains relatively strong because it is perceived as safest, at least the lesser of evils, and is, ultimately, backed by the biggest guns instead of gold. Nevertheless, beware, for nothing lasts forever. Princeton economist and former vice chairman of the Federal Reserve Alan Blinder’s explanation was quoted on that subject, in the January 30 New York Times coverage of the World Economic Forum: The dollar as a reserve-currency is unlikely to be threatened because “there aren’t that many safe havens.” But the dollar’s long-term value against other currencies would be vulnerable if the Treasury debt reaches such heights that investors feel they are holding too many dollar assets. Several attendees at the conference worried about the rising tide of economic protectionism where countries encourage their banks to lend domestically, and credit protectionism, a. new sort of mercantilism where nations sop up credit availability. Trevor Manuel, the South African finance minister, said he wants the big countries to share their borrowed wealth, but he fears they will not: “Large countries are accessing international capital for themselves,” he said. And Mr. Blinder said the risk of credit protectionism would rise if banks were nationalized
The January 30 Times article referred to the nationalization bugaboo in a headline on page 4 of the business section: “A Sense of Danger In Letting Government Direct Investment.” Nationalization of any business, and especially the banking business, is greatly feared by businessmen who do not own the nation. On January 26, 2009 the New York Times quoted Nancy Pelosi on the touchy bugbear: “Whatever you want to call it, if we are strengthening them, then the American people should get some of the upside of that strengthening. Some people call that nationalization. I’m not talking about total ownership. Would we ever have thought we would see the day when we’d be using the terminology, ‘nationalization of banks?’ ”
Never mind that, notwithstanding the Federal Reserve Board’s public-private alliance posture, the all-powerful Federal Reserve Bank is a so-called independent national bank presenting itself as a virtually independent branch of government; that the nation’s corporatist banking system is virtually nationalized and centralized under the all-seeing eye at the apex of the pyramid; and that the financial system is still in the few dangerous and irresponsible hands declaimed by Andrew Jackson in his attack on the Second Bank of the United States, the charter for which was not renewed in 1836. The corporatist principle was laid down well by Steve Forbes’ corporatist hero, Alexander Hamilton, on February 23, 1791, in his implied-powers argument for the First Bank of the United States:
“In entering upon the argument, it ought to be premised that the objections of the secretary of state and attorney general are founded on a general denial of the authority of the United States to erect corporations. The latter, indeed expressly admits that if there be anything in the bill which is not warranted by the Constitution, it I the clause of incorporation. Now it appears to the secretary of the treasury that this general principle is INHERENT in the very DEFINITION of government and ESSENTIAL to every step of the progress to be made by that of the United States, namely: that every power vested in a government is in its nature sovereign and includes, by force of the term, a right to employ all the MEANS requisite and fairly applicable to the attainment of the ENDS of such power, and which are not precluded by restrictions and exceptions specified in the Constitution, or not immoral, or contrary to the essential ends of political society.... If it would be necessary to bring proof to a proposition so clear as that which affirms that the powers of the federal government, as to its objects, were sovereign, there is a clause of its Constitution which would be decisive. It is that which declares that the Constitution, and the laws of the United States made in pursuance of it, and all treaties made, or which shall be made, under their authority, shall be the supreme law of the land. The power which can create the supreme law of the land in any case is doubtless sovereign as to such case.”
James Madison got stuck by political circumstances with the unwelcome task of arguing against the establishment of a national bank – George Washington, who had been Madison’s silent partner at the Constitutional Convention, reportedly denounced Madison, in his dying statement, for his defection. We excerpt this juicy tidbit from Elliot’s Debates report of his February 2, 1791 argument before the House of Representatives:
"This power of establishing a bank had been, [James Madison] said, deduced from the right, granted in the Constitution, of borrowing money; but this [bill to establish a national bank], he conceived, was not a bill to borrow money. It was said that Congress had not only this power to borrow money, but to enable people to lend. In answer to this, he observed that, if Congress had a right to enable those people to lend, who are willing, but not able, it might be said that they have a right to compel those to lend, who were able, and not willing.”
While attending the World Economic Forum in Davos, Mr. Soros said the United States needs to recapitalize its banks, but the way that the TARP funds were used has “poisoned the well,” wherefore anyone in their right mind would be reluctant to commit any more money to the banks in view of how the funds were misused. At first, Mr. Soros reportedly spoke favorably about the so-called bad bank or virtual bank nationalization proposal floated in the United States; we quote the January 28 Reuters account: “Speaking to Reuters Television at the World Economic Forum in Davos, Soros said the planned U.S. fiscal stimulus and proposals for creating a ‘bad bank’ to pool banks’ bad loans and assets may help ease the economic crisis stateside.”
Ironically, the “bad bank” proposal to sequester toxic assets would bring the government full circle, back to the original intent of the so-called bailout bill. And we might suppose on that ironical note that Mr. Soros is allegedly in favor of the asset management company approach he originally opposed due to his preference for direct purchase of shares in banks. After all, under the “bad bank” plan calls on the government to take the toxic assets off the hands of the banks and put them into the “bad bank”, in effect a federal asset management company, for eventual resolution, just as the troubled real estate assets of failed S&Ls were put into the Resolution Trust Corporation.
But according to other reports from Davis, Mr. Soros said the “bad bank” idea was a lousy one. The fatal flaw would of course be in the evaluation of the toxic assets, which are so difficult to evaluate that the price might fall with a rather broad range, hence might be too favorable to the banks, leaving the taxpayers with an enormous loss, or it might not be favorable enough, and the banks would have to come back to the public trough for more capital transfusions, but by that time the public would already be fed up with them. Under the “bad bank” proposal, the price received by the cleansed banks along with their good assets would then remain in private hands, and the asset management company would constitute a public toxic dump. Mr. Soros is interested not in the toxic dump but in the good bank left over: He would seize the troubled banks and dump the unsecured debentures and capital into a “side pocket” or asset management company, and then recapitalize the good banks with a direct capital infusion, using the $1 trillion the government would have expended buy toxic assets instead of seizing them according to his nationalization plan, which he admits Americans do not have an ideological stomach for; a $1 trillion recapitalization under the choice parts of the banks’ balance sheet might allow for the expansion of good loans up to $12 trillion pursuant to Mr. Soros’ understanding of the capital requirement rules. The lousy assets stripped off and put in the government’s “side pocket” would be managed and liquidated. Since the capital and unsecured debt were put in the side pocket too, we suppose the proceeds would be distributed to those shareholders and debtors, hence the government would get nothing in return for is salvaging plan unless some fee were included – we await Mr. Soros’ explanation on that point when he clarifies his plan. We imply from his statements thus far that he believes the original capital injection plan fell short not only because of the amount advanced and the despicable manner in which the funds were allegedly mishandled by misleaders, but also because the toxic assets were left on the banks’ balance sheets; the burned banks were inclined to hoard the new capital, and/or broaden their capital base by acquisition of lesser banks, pending disposition of those assets; the uncertainty of the value of the toxic assets also made the creditworthiness of the banks dubious. Who, besides Congress, the bought and paid for political bureau of big business, would throw good money after bad?
Mr. Soros’ approach would be somewhat similar to that taken by Sweden in the early 90s. In fact, U.S. banking experts have cited Sweden’s experience in support of the so-called bad bank program floated, which is better called a bad bank/good bank approach; the mainstream press has generally waxed enthusiastic about it, thinking that it might be el punto final or last chance for the United States to save its banking system so the rest of the economy has a basis for recovery. Sweden swallowed two large banks whole, and split them into two good banks and two bad banks. The bad banks or toxic asset management companies were dubbed Securum and Retrieva. The good banks were eventually re-privatized. The two bad banks were apparently merged and the assets were successfully managed and disposed of much earlier than expected, at some considerable net cost to the public. Other Swedish banks, fearing nationalization, scrambled for private solutions to the predicament.
But the Swedish success was rather limited, as can be see from Daniela Klingebiel’s expert paper on the subject, ‘The Use of Asset Management Companies in the Resolution of Banking Crises, Cross-Country Experiences’ (Working Paper 2294. Washington, D.C.: World Bank): “The track record of … Sweden … did not record any renewed banking system distress but real credit to the private sector contracted significantly…in the years that followed the establishment of the AMCs, indicating that the restructuring of banks was not yet complete…. While Securum (AMC) may have helped to expedite restructuring in the real estate and construction industry by enhancing the coordination among debtors, its impact on the restructuring efforts in other sectors of the economy appears limited…. Real lending to private sector by banks did not recover. In 1993/94 real credit to the private sector contracted significantly.
Mr. Soros, who is no doubt more familiar with the Swedish crisis on a practical level than most American experts, confessed to Reuters Television that he believes that the good/bad bank measures would be mere palliatives. In any event, he has repeatedly observed that the fallout in the real economy is gathering momentum, and that repairing the financial system will not stop a severe worldwide recession. Following his line of thinking on social injustice, we opine that such a recession would have a much greater hence unfair impact on peripheral countries than on the major economies at the center that helped prop them up for awhile. Instead of banding together and pooling resources for use wherever needed, the wealthier countries might tend to withdraw and hoard their resources in order to fend for themselves. The negative impact will naturally arouse the sense of injustice every person of conscience is endowed with, especially denigrated persons in the virtual colonies who are suffering the most. In the final analysis, the people of the world might resort to war and revolution to settle their accounts.
Most of the above is a skeptical recounting that might lead one to believe that it would be better to do nothing at all because nothing really works – salvation may be in faith and not works, as the firebrand preacher Martin Luther rudely insisted on in such a convincing manner that even classical humanists were enthused. President Obama – prejudicially perceived by some as a messiah and by others as the persuasive anti-Christ forewarned of – fresh from the campaign trail, seems to be very long on recounting the ill consequences of the mistakes of the preceding administration, and somewhat short on innovative solutions nobody has heard of hence might believe in for awhile. He seems to rely on the classic solutions concocted and managed by the same old people whose lackadaisical libertarian attitude caused the current crisis. At least they know what happened; and now they would throw fuel on the smoldering coals in hopes they might burst into flames again, and this time they would do what every repentant soul has done before, better regulate its sins by organizing the greed for more and more fuel – religion worships power while politics distributes it.
What, then, does Yours Truly believe, and what does he do? I am doing better the closer I get to the end. As for contributions, mine is in the form of the interminable bourgeois musing that fascist philosophers of action have complained about. I confess that the whole crisis is a great mystery to me, and I feel it has something to do with the existential crisis each individual lives out. I do have my beliefs to give me confidence during downturns. Indeed, the worse things get, the more of an optimist I am. I have little desire to posses much of what I see as the junk, trash, and garbage of so-called prosperity. If it were not for my proverbial conflict with totalitarian authority, I might like to enjoy the crisis in a world laid out in crosses according to Joachim’s monastery system. Yet I do not resent people who want a lot of stuff as long as those who do not want a lot can have enough to live on and have plenty of leisure to be silly or serious. As risk-averse and impoverished as I am, I am making token investments, or rather gambling, on tremendously risky ventures such as Wells Fargo Bank and General Electric, and I have invested pittances in Cisco and Equity Residential, but I have the highest hopes for my tiny investment in Capstone Turbine’s little engine that could. That is to say that I believe a material turnaround is imminent if repentance is had. But I do not believe that Wall Street, no matter how it is regulated, is essential to economic success. Whole countries and countless business ventures have prospered without a secondary stock market. Puritan critics say the casino is the epitome of vice, and that the house is now churning the market to fleece the small investors on the ups and downs. Apparently fools like me are born every second in Japan, where millions of small investors seem to be snapping up shares as the big investors flee.
I believe that we are part of nature, and that we are experiencing some very bad weather, but fair weather shall return bye and bye, and then the arc of our civilization shall continue on its voyage, with fewer beasts. In mythical terms, I believe that Demeter stooped over to pick the narcissus, sniffed it, fell into a trance, and was abducted into the underworld by its god of the underworld, but she shall return periodically to feed us if we do not abuse her. I believe our translation of Gaea is hysterical; no seeds planted during her period will do any good, but if we abstain and cultivate our nature, which is hers, for awhile, she shall be ready to bear good fruit. I believe that the world is both mentally and spiritually ill, and that no mechanical devices including the injection of capital drugs can be effective absent a moral and spiritual rejuvenation – the moral inclination is rational and wants righteousness, while the spirit is irrational and desires absolute power that it may eternally endure. I am fascinated by the rational economic theories; none of them are really scientific in the predictive sense, and I certainly would NOT have a professional economist manage my financial future, although I might invest 10% of my meager savings in a hedge fund managed by Keynes & Soros – of course my entire savings would fall short of the minimum investment required.
President Obama is well aware of the need for moral rejuvenation, and he is responding with the liberal theology that actually gives precedence to the poor instead of giving it lip service on Sundays, a theology best espoused in North America by the Black Church. It remains to be seen if he can maintain a high moral ground without the fertilizing corruption that helps things grow. The essence of religion is mystical, not moral, and it appears that the President may want to develop his intuition, and rely not so much on his advisors’ well-worn advice. i
His sermons on sacrifice, that everyone must give some “skin” to the cause, finds deaf ears not only in the sort of wealthy people whose fortune is built on greed, but on those lesser folks who have already sacrificed their homes and jobs to the policies previously forwarded by several of his appointees.
Grand plans of action are to be announced on the morrow. Money will have to be created to advance those plans – that is what banks do for their living. We certainly do not need gold-backed dollars, for gold is something to be hoarded by misers. We do not need cement-backed dollars either, although cement can be put to good use. We need infrastructure-backed dollars, for infrastructure investments in the likes of health care and education can provide us with profitable uses for many years. Yet none of the plans will work without widespread confidence in one scheme or the other. The scheme or logos has to be spiritually inspired. Confidence is not something that can be made from without but is something that can be found within. With faith, con-fidence, some plans will still fail, but enough of them shall succeed to get the ball rolling merrily along again. The rolling consensus is forged from conflicting evaluations. When more people are buying than selling a security, its value shall rise in this sphere. Every once in awhile the reputable confidence man is exposed as a complete fraud, and he may smile at this irony on the way to jail. If we cleave to fundamental values, the secondary and derivative markets are less likely to do us harm. The basic principle was set forth in the ancient texts at everyone’s fingertips, so I need say no more except that if liquidity is wanted in this spiritual desert we had better pray for rain.

Sorosian Liberation Philanthropy

2008-11-06T09:04:00.000-08:00

By david arthur walters

Anyone to the left of right is a leftist as far as a right-wing ideologue is concerned; therefore, everything the so-called leftist does, no matter how philanthropic, must be part of a vast left-wing conspiracy to rob rightists of their rights and impose upon them a communistic regime where everyone is actually equal instead of ideally so somewhere in their hidden nature. Communists are naturally dirt poor leftists who are jealous of the selfish way of life of the right wing, whose wealthy elite the leftists would fain rob by virtue of liberal or involuntary charity instead of getting down on their knees like good Christians and begging for compassionate conservatism or voluntary charity. Of course leftists would pave the road to hell by investing the extorted proceeds in the most foolhardy of all causes, the absolute elimination of poverty through the imposition of total utopia on Earth. Indeed, in the final leftist analysis, everyone should be moderately wealthy. Starting with the current food supply, there would be plenty for everybody if only it were evenly distributed. Until then, anyone who is rich is somehow filthy rich. He is no doubt a private capitalist if he started with little or nothing. He got his hands filthy getting rich; he will stand out like a sore thumb no matter what hand he is on.

One glaring example on the left hand is zillionaire George Soros, the self-made private statesman who rose from rags to riches to become a prominent member of the global power elite. When he calls, heads of states hurry to answer the phone. A goodly portion of his gains are ill-gotten if gambling is really a sin. His conscience or native sense of social justice has reportedly moved him from contempt for hypocritical philanthropy to the contribution of hundreds of millions of dollars to liberation philanthropy. He and his foundations are involved in the establishment and support of liberal democracies and international liberal alliances; the advancement of health, education, arts and culture, the establishment and support of independent media and communications; the reform of the criminal justice and public administration systems; the expansion of human rights such as immigrant rights, women’s rights including abortion, and the right to die as one chooses.

Mr. Soros, who in his youth disguised himself as a Christian and survived the battle of fascists and communists over Budapest, has first of all dedicated himself and his fortune to breaking up political monopolies, the closed systems associated with totalitarianism, so that social injustice might be alleviated, for example, with fair compensation. Communists believe the state will wither away altogether, while fascists believe the corporation should be the state. Fascism is the perfection of unbridled capitalism, which espouses the central tenet of free-market fundamentalism; to wit, business unrestrained by government, its mere running dog or side cabinet, so that competitors can be wiped out or bought out until globular Totalitaria monopolizes the globe. Mr. Soros, somewhat of a moderate despite the hypocritally hateful ranting of fundamentalist preachers of love to the contrary, seems to prefer a tolerant, mixed government. He believes the government of the United States has gone too far to the right, towards fascism; therefore, in addition to his efforts to dissolve the political constructs of leftist monopolies and their fascist successors overseas, he devoted many millions of dollars to help depose the right-wing authoritarian neoconservatives who seized the government of the United States. He quite naturally supported the presidential candidacy of Barrack Hussein Obama.

Mr. Obama, as we know only too well, was scandalized during the presidential campaign by the publication of the enthusiastic rants of his longtime, black liberation theology pastor, Jeremiah Wright, and that eventually led Mr. Obama to do the politically correct thing, to divorce himself from his family’s beloved church and to denounce Mr. Wright’s purportedly extremist perspective. In 2003 Reverend Wright had begged God to damn America for oppressing blacks: "No, no, no, not God bless America! God damn America — that's in the Bible — for killing innocent people." Super-patriotic Americans were naturally appalled by the reverend’s un-American exclamations and immediately announced that Mr. Obama must be in complete agreement with his pastor’s bitter denunciation. Never mind the fact that, if Reverend Wright’s prayer were answered, he and his black church would be damned as well, and that such provocative expressions of self-contempt are a traditional Judeo-Christian virtue, supposed to motivate virtuous reforms.

After all, America as a nation has been guilty as sin of racism and bigotry and other forms of oppression. Just as Martin Luther called the onslaught of Muslims in his day “the iron rod of God” brought down on Europe for its sins, a few Christian fundamentalists dared to publicly say that Americans bore some responsibility for Islamist attacks on their lifestyle; but they were shouted down by super-patriots and metaphorically crucified. Martin Luther had been a Catholic himself, and was a witness to the nationalistic or particularistic uprising against the universal church. Such an uprising against the universal was bound to be punished. Patriotism under Christianity was not the religion that we make of it today: nowadays nations are idolized churches, institutions “under God” as political ministers are fain proclaim in congress. Today’s neo-barbarian nations remind us of the defeated barbarian tribes of old when alien Christianity was thrown off from time to time: the tribal idol was dragged through the village, and anyone who did not cheer was dispatched on the spot.

Rev. Jeremiah Wright’s “May God damn American” simply meant, may God condemn America for its waywardness from righteousness, for its injustice. And it is for that waywardness that the city on the hill has been most recently condemned by the surround that expects it to be a stellar example. The righteous indignation aroused by black reverends is intended to provoke constructive action instead of the white man’s pious lip service. Yet dare not any black liberation preacher beseech God to damn America for black oppression, or for any sort of oppression at all for that matter! Candidate Obama had to transcend black-and-white thinking and take the universal or catholic view, at least for appearances sake. Still, people who think that color is symbolically more than skin deep worry that his white side sides too much with his black side, because he has said that he considers himself a black man, and because he has apparently associated with more black people than white people. Wherefore it is advantageous for white people, including President Obama’s philanthropic benefactor Mr. Soros, to understand what constitutes black liberation theology, the religious institution of black power..

Black liberation theology is about siding with the underdog that happens to be black. The God of Justice is the God of the Underdog. It is about having black skin, or at least being symbolically black, meaning that one must be oppressed and enslaved to fully understand the gravity of God. That understanding cannot be had in a lily-white church. White Christianity is associated with individualism, separation of church from state, of Sunday belief from daily practice, with the freedom only in the other world but with slavery in this one; hence this kind of whiteness is the epitome of the hypocrisy early Christians bitterly derided. White worshippers cannot have the faintest idea of what black worship is like until they metaphorically paint themselves black and worship in a black church.

Mind you that black liberation theologian James Cone, in A Black Theology of Liberation, pointed out that “the focus on blackness does not mean that only blacks suffer as victims in a racist society, but that blackness is an ontological symbol and a visible reality which best describes what oppression means in America,” Mr. Cone believes Jesus came to fight Satan. Of course today's Satan is a racist hence the white man is Satan's agent: "Theologically, Malcolm X was not far wrong when he called the white man 'the devil.' The white structure of this American society, personified in every racist, must be at least part of what the New Testament meant by demonic forces... About thirty years ago it was acceptable to lynch a black man by hanging him from a tree; but today whites destroy him by crowding him into a ghetto and letting filth and despair put the final touches on death." The criminal justice system is demonic. All that Black theologians are asking for with this strong language is freedom and justice, not special rights for blacks.

Black theology is a theology of liberating works instead of faithful lip-service to love. It is the Black Power of the Black Book. Black liberation theology celebrates the God of Black Existence instead of the God of White Oppression, so that everyone may actually be equal on this Earth in the sight of God. Although God is many things to many people, God is Power to all, regardless of their color and form. Power must be justly distributed. Luke’s book best expresses the Gospel of Liberation spread by Paul, a Gospel good for all oppressed people: “The Spirit of the Lord is upon me, because he has anointed me to preach the good news to the poor. He has sent me to proclaim release to the captives and recovering of sight to the blind, to set at liberty those who are oppressed, to proclaim the acceptable year of the Lord.” (Luke 4:18-19)

Black liberation theology is a theology of oppressed particulars: the theology of the poor in particular, versus the universal theology of the universal wealthy god; the theology of the female, in particular, as opposed to the theology of the universal male god; the theology of blacks, in particular, in contrast to the universal theology of the white god. It is a Black Logos, a Black Canon for the Oppressed, a Theology of Victimology, and a Language of Liberation. And yes, the Gospel of Liberation is, first and foremost, for Slaves; one must first be slavish to be liberated! Oppressed people are not all black, but blacks can liberate all, so the white person might like to become, in this special sense, a wigger to be liberated, and then he and she will not be surprised to know that only a wise mulatto can liberate America. White enslaved black so black could save white.

Certainly liberation philanthropist George Soros, who was himself the recipient of charity during his London school days, can understand that white charity is sentimental, condescending, denigrating. "Authentic love is not 'help,'" Mr. Cone stated, "not giving Christmas baskets, but working for political, social, and economic justice, which always means a redistribution of power. It is the kind of power which enables blacks to fight their own battles and thus keep their dignity."

Now we have credited George Soros’ contributions to liberation philanthropy instead of liberation theology because he is a noncommunist, secular Jewish intellectual and philosopher who preaches Open Society liberation from Closed Society enslavement. If only the Judeo-Christian one-god were at the center of his universal or catholic activism, he might pass for a liberation theologian worthy of scrutiny by the Catholic Inquisition – the Sacred Congregation for the Doctrine of the Faith. The Inquisition is bound to question the faith of any doctrinaire who confesses the one and only God yet seemingly puts particularistic politics ahead of the one-God, and whose theology therefore is no longer the Logos of Theos but is rather an ideology or logic of a particular set of ideas. It might be proper to call the support that Mr. Soros provides to liberal causes philanthropy to the extent that he loves man, but his man-centered philanthropy is hardly charity in the Judeo-Christian sense, even when it is tax deductible, because its humanism is not based on showy love for a deity above all, to whom all works, not matter how various, must be devoted..

Mr. Soros, like liberation theologians, advocates “social justice” for the world’s poor majority. He believes the victims of unjust political powers should be adequately “compensated” for social injustice, but by that he does not mean to instantiate totalitarian communism. Justice would best be done by liberating the poor from the top-down structural restraints of relatively closed societies and from the predatory colonial-style practices of the First World gang of affluent and relatively free states. What is needed everywhere, including the United States, is not anarchy, or liberation from authoritarian government per se, but liberal democracy, an adequately regulated path to that loosely knit Popperian and Sorosian utopia called the Open Society. To that end Mr. Soros has actively committed himself, donning the robe of a practicing philosopher-king, a role that his philosopher-hero Karl Popper might deplore from the grave because it smacks of Plato’s totalitarian Republic. However, Mr. Soros is too busy with his foundation’s activities lately to give the fallibility of his own philosophical principles enough thought. Perhaps he will give himself cause for doubt, and send his regal robe out for dry cleaning. Thinking ends where action begins, as an astute fascist philosopher once pointed out in his Italian philosophy of the Act as mankind embarked on another killing spree for its moral improvement. Once an action begins it might be halted, but one cannot undo what has been done, and what has been done irrevocably influences what follows. Karl Marx said that the objective of philosophy is not to understand the world but to change it. But philosophy is by nature skeptical; activists have little time or taste for self-contradiction, hence tend to be habitual ideologues to excuse themselves, or “by God” bigots who refer complaints about their contradictions to “God’s mysteries.”

As for the god of godlessness, it is to their own detriment that atheists have abandoned or murdered God and have little to show for it but an idolized pile of dung. At least the deity might have been kept for lip-service, to be wheeled on stage to resolve antinomies and to confound opponents with “God’s mysteries.” Without God to conveniently justify differences, an activist philosopher dealing with the dirty details may find it difficult to keep his hands clean and maintain a meaningful transcendent universal in particular situations necessarily defined by their differences. Somehow faith in the One must be upheld above the multiplicity of works or things will not work out or be reconciled in the end. But faith in justice must always admit and thus unavoidably and unintentionally perpetuate the injustices without which there would be no worldly justice; thus justice needs injustice just as the one-god needs an adversary to sum up the world and rule over its dirty details in order for the one-god to distinguish himself. Whereas pantheism identifies the universe in all its particulars with divinity, monotheism is a dualist system, setting the divinity apart and above the creation. The creator may love the creation as long as the creatures love him over and above themselves. Indeed, they must love him or else be damned by the Dom’s judgment or doom. It is an either/or dualist proposition. One must choose the best s/he can. Some things are relatively better than others, or least harmful to all concerned, but one thing, the universal, stands above all, and precisely what that is cannot be known or said because it is indefinite hence inscrutable and ineffable. Strictly speaking, the liberated devotee, knowing that his judgment is fallible, idolizes no thing in itself, for no thing has intrinsic value: rather, he places his faith in nondenominational Nothing, in which all existents are justified as negations of one another. Nothing is permanent. Nothing is perfect. Liberty! Take a hammer and smash everything in sight: whatever is left is good; in this iconoclastic sphere, the difference between an atheist and theist or pantheist and monotheist is irrelevant.

George Soros, a so-called atheist and secular Jew, appears to have faith in justice, as did his orthodox forefathers. Indeed, a rereading of the ancient scripture might lead us to assume that its authors’ fondest hope is for justice in this world, and that the Hebrew god is, in effect, Justice. That is to say that God’s presence is performed thru justice. Following the famous stages set forth by Auguste Comte, the god of justice has become the metaphysical concept of justice and then has become the positive practice of justice for the benefit of humankind. But conservatives with original sin in mind hew to orthodoxy and cast a suspicious eye on revolutionary deviances from the straight and narrow path, deviances that might upset the applecart hauled out of Eden. Man and his idea of justice is untrustworthy, hence faith must be placed in God, the justification for everything.

We are not surprised to hear that Mr. Soros’ Open Society foundation has extended a charitable hand to liberal Catholic organizations such as The Catholic Alliance for the Common Good. So-called pelvic theologians, or genitalia dispensationalists whose main concern is how people deploy their genitals, have accused him of supporting Catholics For Free Choice, an organization that believes that a woman should have control over her own body, but an officially reported $100,000 contribution to the Catholic Alliance in 2006 troubles them all the more because of its social theology. Although the Open Society is not George Soros incarnated, and although a donation to any one organization does not mean that the contributor believes in everything the organization says or does, the Open Society donation to the Catholic Alliance proves to pelvic theologians that George Soros is sympathetic to the socialist aims of social theologians. Of course for antisocial people “socialist” is a “dirty word” or “black label” intended to sully the reputation of anyone to whom it is applied, in the main those activists who would “spread the wealth” around from the richer to the poorer, especially poor black Americans, since they are the poorest of the poor.

Like George Soros personally, one of the fundamental concerns of the Catholic Alliance is social justice: “We envision a society shaped by the values of social justice, human dignity, and the common good where faithful American Catholics can embrace the fullness of the Church’s social justice teachings when participating in democratic society. As Catholics, we inherit a rich tradition…based on Jesus’ call to love one’s neighbor…and the Hebrew prophetic commitment to justice and righteousness.”

Catholic Alliance socialists still hew to the Catholic teaching of the transcendence of God over black-and-white issues. Members of the Alliance also ally themselves with the Catholic preference for the poor, because “society is only as strong as its weakest members. The only way to foster the common good is to work together to radically improve the situation of society’s poor and most vulnerable members. We are called to base both our individual choices and public policy decisions on how they affect the poor.” No doubt “every human has a fundamental right food, shelter, clothing, healthcare, education and employment. Only by achieving these…on a collective scale…can society fully promote human dignity.” And of course “government, or the state, has as its core a positive moral function. It’s an instrument to promote human dignity, human rights and the common good.”

Furthermore, the Catholic Alliance works to realize the “economic justice” that is supposed to be furthered by the Church. Pope Paul II is quoted as an exemplary authority: “There are needs and common goods that cannot be satisfied by the market system. It is the task of the state and of all society to defend them. An idolatry of the market alone cannot do all that should be done.”

As for social injustice in the United States, the 1986 U.S. Catholic Bishops Pastoral Letter on Catholic Social Teaching and the U.S. Economy is quoted by the Catholic Alliance: “The ultimate injustice is for a person or group to be treated actively or abandoned passively as if the were nonmembers of the human race.”

It appears that people who believe in God may believe in almost anything else as long as they keep God in mind; hence great religions are split along political lines at the front, so that only God may determine who is right enough to win the bloody war of who loves Him most of all. The liberal activist platform of liberal theology black or white is frighteningly familiar to its conservative opponents, many of whom are Catholics and were duly horrified by the campaign rhetoric of presidential candidate Barrack Hussein Obama and his Catholic running mate Joe Biden. Naturally, liberation philanthropist George Soros was a generous supporter of the campaign, although he does not entirely agree with the agenda of the Democratic Party.

Since the “god-fearing socialist” and “black church liberationist” Candidate Obama will probably be elected president today, and since he may be advised by his Catholic running mate and by the white atheist philosopher and liberal philanthropist George Soros, it would behoove the student of liberation philanthropy to brush up on white liberation theology in addition to black liberation theology – they have their common root in 1960’s Latin America. Again, liberation theology is the theology of the underdog whatever the color of the dog, a theology of works that expects liberation here and now instead of in the afterlife. The historical Church has often taught its heretics not only the vices but the virtues of its enemies by its formal denouncements – the inimical works were often destroyed. Of course the Church has no such power of total censorship today, so we can hear the words from the horse’s mouth, so to speak, and we can find thousands of liberation theology tracts at our fingertips on the Internet. Still, with the religious activists’ protests against oppression in mind, it is to our advantage to listen to the authority that places its faith in the universal over the fleeting particulars of existence, for dynamic activism is nothing without a static hypothesis, just as relativism is inconceivable but against a stable background.

The doctrine set forth by the inquisitor Cardinal Joseph Ratzinger, now Pope Benedict XVI, is instructive, although it hedges somewhat to defend orthodoxy. For instance, we turn to his ‘Instruction on Christian Freedom and Liberation, given at Rome, for the Sacred Congregation for the Doctrine of the Faith, on March 22, 1986. He avers that the godly truth that shall set us free is centered in Christ on the redeeming Cross, “the root and rule of freedom,” and it is this truth that is “at the heart of the mystery of faith.” The liberal movement seeks to set man free from superstition and domination by man. Its progress is undeniable; however, serious ambiguities plague the movement. Its individualistic ideology favors the unequal distribution of wealth, so that workers came to be denied the fruits of their work, and their “just demands” have “led to new forms of servitude, being inspired by concepts which ignored the transcendental vocation of the human person.”

Wherefore the liberal movement has fostered inequality amongst individuals and nations, and through its technological advances, it has resulted in totalitarian systems and other forms of tyranny including terrorism. The movement has blamed faith in God for man’s enslavement, not understanding that man’s independence from God alienates him from his source of freedom. “Escaping the measuring rod of truth, he falls prey to the arbitrary; fraternal relations between people are abolished and give place to terror, hatred and fear. Because it has been contaminated by deadly errors about man’s condition and his freedom, the deeply rooted modern liberation movement remains ambiguous. It is laden with promises of freedom and threats of deadly forms of bondage.”

Now because the Church has intervened in the name of Christ, she is accused of setting herself as an obstacle in the path to liberation and it is said that her enmity to freedom is demonstrated by her own hierarchical structure. But real freedom has always been known to the Church through its faithful, “especially among the little ones and the poor. In their faith, these latter know that they are the object of God’s infinite love.” In fact it is the poor who understand “that the most radical liberation…is the liberation accomplished by the Death and Resurrection of Christ.” The just and poor endure persecution, martyrdom and death; but they live in hope of deliverance. Above all, they place their trust in God. The Son of God by appearing on Earth made himself poor to save us, therefore he wishes to be recognized in the poor. The Church then gives preference to the poor, and engages in countless acts of charity.

The Grand Inquisitor informs us that freedom must be ethically employed, to save man from the evils of individualistic disobedience to God’s will. Each man must learn to “unite his will to the others for the sake of true good” so that his will is “in harmony with the exigencies of human nature.” This unison or justification and correspondence of God’s will with man’s free will is in fact the criterion of truth. “Freedom is not the liberty to do anything whatsoever. It is the freedom to do good.” That is to say that freedom is not freedom: it is voluntary obedience to law. “Authentic freedom is the service of justice while the choice of disobedience and evil is the slavery of sin.” Man becomes free only to the extent that he knows this and acts accordingly, justifying his behavior with God’s commands. Real freedom is ethical inasmuch as it chooses moral good over immorality. This shared freedom “confirms the loftiest insights of human thought.”

Sin, says the Grand Inquisitor, is the root of human alienation from God, in whose image man was created. “By sinning, man lies to himself and separates himself from his own truth.” By “seeking total autonomy and self-sufficiency, he denies God and denies himself. Alienation from the truth of his being as a creature loved by God is the root of all other forms of alienation.” The modern liberation movement, with its individualism and predominating interest in created things, has given itself over to idolatry. The “worship of created things falsifies the relationship between individuals and brings with it various kinds of oppression. Again, “by sinning, man seeks to free himself from God. In reality he makes himself a slave.” For him, divine law is intolerable. The sinful man has become his own center; he “tends to assert himself and to satisfy his desire for the infinite use of things: wealth, power and pleasure, despising other people and robbing them unjustly and treating them as instruments.”

It might seem from the above that the Grand Inquisitor is a communist. He might admit to spiritual or theological or catholic communism, but earthly or political communism is anathema – the Church of course is purportedly apolitical. Cardinal Ratzinger’s “fundamental principles” attempt to reconcile the antagonism between individualism and collectivism “Intimately linked with the foundation, which is man’s dignity, are the principle of solidarity and the principle of subsidiarity. By virtue of the first, man with his brothers is obliged to contribute to the common good of society at all its levels. Hence the Church’s doctrine is opposed to all forms of social or political individualism. By virtue of the second, neither the state nor any society must ever substitute itself for the initiative and responsibility of individuals and intermediate communities… Hence the Church’s social doctrine is opposed to all forms of collectivism.”

How is justice to be done according to logical contradictions? Love is sufficient justification. The mission of the Church, states the Prefect of the Sacred Congress for the Doctrine of the Faith, involves the promotion of justice, but she must not be preoccupied with particular worldly orders but with divine unity, the good of the whole. “The salvific dimension of liberation cannot be reduced to the socio-ethical dimension, which is a consequence of it. By restoring man’s true freedom, the radical liberation brought about by Christ assigns to him a task: Christian practice, which is the putting into practice of the great commandment of love.”

For a fairer view of Cardinal Ratzinger’s notion of justice, we turn to his previous pronouncements, ‘Instruction on Certain Aspects of the Theology of Liberation’, given by the Prefect at Rome, at the Sacred Congregation for the Doctrine of the Faith, on August 6, 1984. “The warning against the serious deviations of some ‘theologies of liberation’ must not be taken as some kind of approval, even indirect, of those who keep the poor in misery, who profit from that misery, who notice it while doing nothing about it, or who remain indifferent to it. The Church, guided by the Gospel of mercy and by the love for mankind, hears the cry for justice and intends to respond to it with all her might…. the Church, which wants to be the Church of the poor throughout the world, intends to come to the aid of the noble struggle for truth and justice. She addresses each person, and for that reason, every person. She is the universal Church, the Church of the Incarnation. She is not the Church of one class or another…. An effective defense of justice needs to be based on the truth of mankind, created in the image of God and called to the grace of divine sonship. The recognition of the true relationship of human beings to God constitutes the foundation of justice to the extent that it rules the relationships between people. That is why the fight for the rights of man, which the Church does not cease to affirm, constitutes the authentic fight for justice… The acute need for radical reforms of the structures which conceal poverty and which are themselves forms of violence should not let us lose sight of the fact that the source of injustice is in the hearts of men. Therefore it is only by making an appeal to the 'moral potential' of the person and to the constant need for interior conversion, that social change will be brought about which will be truly in the service of man….”

Liberals and conservatives alike can enjoy liberation rhetoric to a certain extent because everyone likes the idea of freedom; but they might disagree on the degree and kind of order necessary for freedom to be enjoyed. The rhetoric is ambiguous because we are divided between freedom and order within. Everyone is a liberal to the extent that he or she wants to be liberated from some evil or another, howsoever defined. That evil must have been within before it was let loose on the world. In addition to the cry for social change at this crucial turning point, we do need to hear as well more fervent moral appeals for inner change from liberal philanthropists and liberal theologians and liberal politicians – especially from the B&W messiah who has arisen in America to take the pulpit, and from the books and testimony of his billionaire hedge fund manager and philosopher.

We were adjured to “welcome change” during the Dot.com Revolution because “change is inevitable”, but we certainly did not want to be welcome mats for someone else’s sort of change. We were afraid of change; we balked; the Regresivos seized our government and we are in a sorry state indeed. Enter the Progresivos to legislate more external changes. Ironically, the Regresivos and Progresivos have much in common; both parties are Rotativos, rotating pragmatically, one after another, around the public feeding trough, and to what end? To gradual reform, to a tinkering of the machine so business as usual could be perpetuated ad infinitum? We are tired of the vicious circle, so we cry out for change and the pendulum swings back and forth and round and around.

Ironically, the nervously milling crowd lowing for change does not like big CHANGE, but never mind. Our civilization will no doubt change whether any one faction likes it or not. Civilization is a technical matter, and rapid technological progress has lifted all boats. Mechanization allows us to produce more and more goods and to spread more of the surplus around. Moral progress is another matter altogether, lagging so far behind technology that we might coin the motto High Technology, Low Morality. But we have had considerable moral improvements realized along the lines laid out by the ancients, in part because scientific and technologically advances have allowed us to better afford the material aspect of moral conduct - sharing. As Lyndon Johnson put it, everyone will get what they have coming at table and the surplus will be passed around. But material sharing will be for naught in the end unless spiritual change is wrought so that love for the universal may reconcile the strife of particulars. May three equal one, in the name of the subject, object, and relation, as one. We all ready have white, and black, and their relationship in one person. We ask for nothing less than the ultimate concrete universal. We ask for a miracle.

Joe the Plumber's Magic Money Machine

2008-10-30T09:51:00.000-07:00

Business was down for Joe the Plumber. So far down that he had to lay off three of his Mexicans. Alas, if things did not get way better soon, which was highly unlikely, it appeared that he would be making somewhat less than $250,000 in 2009, so he decided that he and his wife Jenny must vote for Barrack Obama because the suave candidate had promised he would cut taxes for everyone making less than that handsome sum. As for the $250,000 Joe the Plumber had stashed away in his basement hiding place, being his earnings net of the funds he had deposited in his bank to pay expenses, he decided he would do the patriotic thing and report it and whatever else he might net until the end of the year on his 2008 tax return.

Furthermore, Joe the Plumber would put the cash in his old, green toolbox Monday morning and take the money to the bank and deposit it. At least the whole amount would now be safe in the bank, he thought. Thanks to the Bailout, the FDIC now insured deposits up to $250,000, which happened to be the annual income that divided the poor from the rich in the United States, whereas he would have lost $150,000 of it if it had been in the bank a month ago, as the insurance only covered $100,000 back then. He had gotten down on his knees with Jenny and the kids and thanked God that he had not put all the money in the bank before, as the Great State Bank had failed and had been duly federalized and renamed the Federal Great State Bank. So now his bank, backed by no less than Uncle Sam and In God We Trust, was sound, and his deposits would be safe from bank failures if not from tax collectors.

Joe the Plumber would not lose any sleep over the fact that he had evaded at least a half-million dollars in taxes over the past few years as an unlicensed plumber. It was just a fluke that the I.R.S. had nailed him for three years with a random audit, and would not have him prosecuted if he paid up in ten days. He really did not believe he had done anything morally wrong even though tax evasion was illegal. First of all, he was a democratic Republican, one who believed in majority rule through elected representatives hand-picked by party bosses; at least he was a Republic when the Republicans were in control of Congress and the White House; and everyone knew that the majority more or less cheated on their taxes, many of them fraudulently taking charitable deductions on Schedule A for their compassionate conservatism. Moreover, Big Government was wrong simply because of its size, so Joe the Plumber was not being selfish for withholding supplies from it until it was reformed, trimmed down to expend its limited revenue to achieve sovereignty’s most legitimate form, the mightiest police and military force in the world, greater than the sum of the next three largest forces on the globe.

Now Joe the Plumber had taken some interest in banking due to the banking crisis. As a plumber, he was especially fascinated by the talk about the credit and liquidity crises and cash flows, and how the banks had shut the valves even when they had plenty of liquid, because of the confidence crisis. The economists said there was a difference between money and credit, inasmuch as money is what you buy groceries with, while credit pays for groceries with money borrowed from someone else whom you will pay back, but Joe the Plumber thought the difference was essentially between paper and plastic, the two being virtually convertible at the check-out counter. And then he did some Internet research and found out that banks are money machines that have a monopoly on creating money out of money by ideally loaning out a total of ten times the amount of money deposited with a bank. His mouth watered when he read the juicy paper, ‘Reserve Requirements’, published by the Federal Reserve Bank of New York:

“If the reserve requirement is 10%, for example, a bank that receives a $100 deposit may lend out $90 of that deposit. If the borrower then writes a check to someone who deposits the $90, the bank receiving that deposit can lend out $81. As the process continues, the banking system can expand the initial deposit of $100 into a maximum of $1,000 of money ($100 + $90 + $81 + $72.90 + … = $1,000).”

Joe the Plumber knew that depositors may lose confidence in banks and want their money back at the same time, make a run on banks, wiping out the reserves and driving even sound banks into bankruptcy. Besides the reserve requirement on deposit liabilities, banks have capital requirements requiring them to have capital, the difference between assets and liabilities, as a cushion amounting to a certain percentage of their assets such as cash, government securities, and loans. Steve Forbes explained to Joe the Plumber that an “asinine” accounting rule called FAS157 required banks to write down or “mark-to-market” the value of their loans to a minimal level when there was virtually no market for them, hence the banks lost assets and capital at the stroke of a pen, and could no longer lend out money. So the government stepped in to buy stock. The “liquidity infusion” of the government’s head plumber greatly improved the bank capital, putting the banks in a position to make loans and thereby create money again.

Yet, learned Joe the Plumber, banks might have plenty of cash to lend out but refuse to do so because they lose confidence in one another, aggravating the credit crisis. One reason for the diffidence might be the amounts due from gambling on the fluctuating value of loans outstanding, placing bets called insurance premiums via “credit default swaps.” Anyone can play, even if she has no interest in the loan bet on. Credit default swaps were being retailed by Lehman on fancy paper in Germany as if they were as good as money. The U.S. Congress exempted the unregulated betting from state gambling laws. Joe the Plumber learned that maybe $70 trillion of those so-called insurance policies are out there; netted out, they might amount to $5 trillion due and payable, and for all one bank knows, another bank might be bankrupted over night – it is the custom to seize banks in the middle of the night while everyone is fast asleep.

Anyway, Joe the Plumber supposed that if extending credit makes money because the amount of the loan is deposited in a bank and 90% of it is loaned out again and deposited again to create more money, and so on, then there is not much difference between money and credit. Indeed, he noticed that the bills he had on hand were clearly marked, “Federal Reserve Note.” They did not amount to a promise to pay so much gold to the bearer on demand; the promise amounts to acceptance as legal tender. There exists an implicit promise that people will deliver goods and services on presentation of this printed money, which is only a small portion, at least half of it in foreign countries, of transaction money; the most of transaction money is demand deposit or checking account money, which is useful to both the depositor and the bank, while paper money is only immediately useful to the bearer.

Money, Joe the Plumber concluded after thinking about it for awhile, is both an asset and a debt, a sort of system of mutual claims, and the debt mounts when the supply of money is inflated by credit expansions. If people cannot pay that debt by producing what is owed when it comes due, the money will lose purchasing power. Be that as it may, he was disturbed to hear from the White House that the banks were not loaning out the taxpayer money used to buy stock in the banks. They were sitting on the money or using it to gobble up other banks. When fast-talking White House Press Secretary Dana Perino came out to the podium and speedily said, “What we’re trying to do is get banks to do what they are supposed to do, which is support the system that we have in America. And banks exist to lend money,” Joe the Plumber was livid. So they were holding out! Lending the money out should have been part of the scheme! “The way that banks make money,” she said, “is by lending money. And so, they have every incentive to move forward and start using this money.”

“Damn right! That’s how they make money, and in more ways than one, so they had better start doling it out!” Joe the Plumber affirmed out loud to the television, and yelled out to Jenny to bring him another Bud from the kitchen. Surely the banks would heed the White House now and ramp up lending, he thought. He figured he would help the cause with his $250,000 Monday morning. Why, the banking system, if functioning efficiently, might turn his money into $2,500,000! Heck, after he paid off the I.R.S. for back taxes and paid some estimated taxes, he might borrow some money from the bank himself.

Another reason he had for wanting to deposit his money in the bank instead of keeping it in the basement was not so patriotic. He was concerned, for example, that he would make the I.R.S. suspicious if he tried to immediately pay the $42,594 back taxes and penalties and interest he owed in hard cash at the I.R.S. office downtown – a check drawn on the bank would be the best way to go.

Having resolved to do what he had to do, he turned his thoughts to the troubling thought that he might not be a $250,000 man again until the economy recovered from the impending Great Recession. So he and Jenny would have to vote for Barrack Obama so save money in taxes. Hopefully, things would be looking up in four years, in which case he and Jenny would have to vote for Sarah Palin. Indeed, he would do what any enterprising economic animal would do. Still he was mad as hell at the whole scene. What aggravated him the most about all these promising politicians is that they were bribing taxpayers with taxpayer’s money. However, he managed to calm down a bit by meditating on the magic of making money. Maybe man can live on loans alone after all.

The Paulson Plans

2008-10-18T09:00:00.001-07:00

OPINION: Inflation has been successful.

It was certainly fascinating to see presumably rational experts relying on the fluctuations of the so-called wisdom of a volatile stock market to influence their judgments. When the indexes plummeted after Henry Paulson’s original asset management bailout bill was voted down, Congress hastily took up the bill again and modified it for quick approval, providing pork barrel incentives such as relief from taxation on children’s wooden arrows. Why, then, did the efficient stock market indexes fall, after the modified bailout was approved by congress?

Perhaps the Stock Market read the International Monetary Fund’s September 2008 Working Paper, ‘Systemic Banking Crises: A New Database, prepared by Luc Laeven and Fabian Valencial. One might reasonably presume that bailout mastermind Henry Paulson, U.S. Treasury Secretary and member of the Board of Governors of the International Monetary Fund, had read it too. After studying 42 well documented banking crises in 37 countries, where excessive credit expansion was among the many causes of the crises, one of the conclusions drawn by the researchers was that the use of government asset management companies to take over and manage distressed assets has been largely ineffective:

“Special bank restructuring agencies are often set up to restructure distressed banks (in 48 percent of crises) and asset management companies (AMC) have been set up in 60 percent of crises to manage distressed assets. Asset management companies tend to be centralized rather than decentralized. Examining the cases where AMCs were used, we find that the use of AMCs is positively correlated with peak non-performing loans and fiscal costs, with correlation coefficients of about 15 percent in both cases. These correlations may suggest some degree of ineffectiveness in AMC’s, at least in those episodes where asset management companies were established. In line with these simple correlations we find Klingebiel (2000) who studies 7 crises where asset management companies were used and concludes that they were largely ineffective.”

If we turn to Daniela Klingebiel’s 2000 report for the World Bank, entitled ‘The Use of Asset Management Companies in the Resolution of Banking Crises, Cross-Country Experiences’, we realize we should make a distinction between an AMC that takes over a bank whole-hog to restructure it and an AMC whose purpose is to rapidly dispose of distressed assets:

“The results of the analysis of the seven cases can be summarized as follows: Two out of three corporate restructuring AMCs did not achieve their narrow goals of expediting corporate restructuring. These experiences suggest that AMCs are rarely good tools to accelerate corporate restructuring. Only the Swedish AMC successfully managed its portfolio, acting in some instances as lead agent in the restructuring process. It was helped by some special circumstances, however: the assets acquired were mostly real estate related, not manufacturing that are harder to restructure, and were a small fraction of the banking system which made it easier for the AMC to maintain its independence from political pressures and to sell assets back to the private sector. Rapid asset disposition vehicles fared somewhat better with two out of four agencies, namely Spain and the US, achieving their objectives. The successful experiences suggest that AMCs can be effectively used, but only for the purpose of asset disposition including resolving insolvent and unviable financial institutions. But even achieving these objectives required many ingredients: a type of asset that is easily liquefiable – real estate, mostly professional management, political independence, a skilled resource base, appropriate funding, adequate bankruptcy and foreclosure laws, good information and management systems, and transparency in operations and processes.”

One of the successful outcomes was had through the Resolution Trust Corporation in the United States: “The RTC’s success was helped by the fact that most of the assets to be disposed of were real estate loans/or assets or mortgage loans that could relatively easily be bundled and securitized or sold via bulk sales. Moreover, a deep and sophisticated capital market and a recovery in the real estate market also proved advantageous for the RTC as did an effective organizational and governance structure and skilled personnel.”

Furthermore: “Adequate governance structures; professional management and extensive use of private sector contractors for asset disposition. RTC relied on a detailed set of directives and guidelines to its staff and contractors that covered a wide range of operations, including asset management and disposition, contract policies, bidding procedures and marketing. While this reduced RTC’s flexibility in handling individual cases, they minimized the possibility of fraud and made policy and cost evaluation more transparent and expedited resolution process. Effective organizational structure including information management systems that can handle large amount of information and management of assets which allowed RTC to collect 31% of the total assets transferred and reduced by one third the amount of assets needed to be sold.”

But not was not peaches and cream at the RTC, nor were the results all too clear: “Sporadic funding of RTC (several pieces of legislation were required to approve funding) hampered speedy resolution of failed S&Ls and increased resolution costs. Rapid asset disposition was hampered by inconsistent objectives of agency. In addition to cost minimization and expeditious disposition objective, the RTC was also supposed to structure and time its asset sales to minimize any impact on local real estate and financial markets…. Real credit did not grow, and whether broader objectives were met or not is unclear.”

Naturally, a strong economic recovery is crucial to the success of asset management companies. And of course lackluster demand for real estate assets impedes returns where real estate is the underlying asset to be disposed of. We suppose the RTC would have netted a handsome profit on the disposition if it had held on to the assets awhile longer. But the experts believe rapid disposition is the key to successful resolution, and so would those well connected buyers who like to pick up distressed assets at fire sale prices:

“The warehousing of assets in the hopes of obtaining higher prices later may not prevent prices from tumbling since the future supply of assets will be discounted in current prices. This is especially the case for real estate assets, where fire sale losses need not imply an economic loss of value. At the same time, selling assets rapidly establishes floor prices that will promote a speedier recovery from the economic crisis. This may especially be so for public AMCs which typically have limited market insights. The success of rapid asset disposition and liquidation agencies will be measured by the speed of asset disposition. Here, an AMC is judged to be successful if assets, including banks, are disposed of rapidly that is within a five year timeframe.”

Ms. Klingebiel discussed the centralization-decentralization controversy: “There is an ongoing debate over the best model for asset management and recovery: should debt restructuring and workout be done by the banks themselves—the ‘decentralized model’—or should bad debt be transferred to a centralized publicly owned asset management company charged with resolving the overhang of impaired assets.”

On the one hand, the centralized approach “permits consolidation of skills and resources—centralization of work-out skills and information technology—in debt restructuring within one agency and may thus be more efficient in recovering maximum possible value. A centralization can also help with the securitization of assets as it has a larger pool of assets. It centralizes the ownership of collateral, thus providing potentially more leverage over debtors and more effective management. Moreover, distressed loans are removed clearly, quickly and completely from banks allowing them in turn to focus on their day-to-day activities.”

However, “A centralized workout unit may also face problems related to its size and ownership structure. If the agency carries a large portion of banking system assets, it may be difficult for the government to insulate such an entity from political pressure especially in cases where the government is also charged with the restructuring of the assets and where a large portion of banking system assets has been transferred. Moreover, a transfer of loans can break the links between banks and corporations, links that may have positive value given banks’ privileged access to corporate information. If AMC assets are not actively managed, the existence of a public AMC could lead to a general weakening of credit discipline in the financial system and lead to a further deterioration of asset values.”

The system might be better off where nonperforming loans (NPLs) are concerned, if we leave them to the banks to work out: “In general, banks should be better placed to resolve NPLs than centralized AMCs as they have the loan files and some institutional knowledge of the borrower. Leaving the problem assets on banks’ balance sheets may also provide better incentives for banks to maximize the recovery value of bad debt and avoid future losses by improving loan approval and monitoring procedures. Leaving NPLs with banks also has the advantage that these banks can provide new loans in the context of debt restructuring. Successful decentralized debt workouts require, however, limited or no ownership links between banks and corporates, otherwise the same party would be both debtor and creditor, adequately capitalized banks and proper incentives for banks and borrowers. For example, the very slow speed of restructuring in Japan is in part due to the extensive ownership links among banks, other financial intermediaries, and corporations. Moreover, successful debt workout by banks requires that financial institutions have sufficient skills and resources to deal with their problem loans.”

We may briefly compare those factors cited as favorable to resolution success in the International Monetary Fund and World Bank papers, to see if the factors are present or absent in our 2008 Bank Crisis:

A strong economic recovery was present in the past successful resolutions of bank crises, but a deep and lengthy recession is expected today.

The distressed banks involved in successful resolutions were small and the large banks were sound, which is not the case in 2008.

Competition from foreign banks provided domestic banks with an incentive to snap up recapitalized banks in successful resolutions, sometimes assuming significant losses in the process, which is in part true in 2008. Furthermore, in the present crisis, unlike previous ones, sovereign wealth funds have taken significant positions in troubled banks, a fact that has troubled patriotic domestic factions

The nonperforming assets disposed of by successful AMCs were very small, one percent of bank assets; in 2008 the nonperforming assets, especially if we include the trillions of dollars of contracts derived from the structured mortgages, are enormous.

The successful AMCs had adequate funds; the 2008 AMC was to have $700 billion, which some experts deem insufficient, to be doled out piecemeal, but since the Secretary of the Treasury has changed his mind as to the utilization of the funds, the AMC, if one is actually funded, will get far less than $700 billion because much of it will be otherwise expended, say, in the purchase of capital stock in banks.

The successful AMC must be politically independent; the 2008 Paulson Plan provides virtually absolute discretion to the Secretary of the Treasury, who is obviously a political creature, a free market fundamentalist ideologue and investment banker who was instrumental in creating the credit expansion that led to the 2008 crisis, and in delaying the remedies, to select and fund asset management companies and otherwise dispose of the taxpayer funds allotted by Congress.

Successful techniques for credit crises resolution depend on the credibility and creditworthiness of the government. The majority of voters and their representatives believe the Bush Administration is untrustworthy and incredible. Many ordinary Americans suspect that the bailout plan may ultimately amount to a colossal rip-off of the American people by the political-economic power elite. They believe it is more than coincidence that the very people who brought the crisis down on America are the ones in charge of the resolving it, and with the same spendthrift means that caused the disaster. They do not think it is a coincidence that one of the main beneficiaries of government intervention thus far has been the firm where Mr. Paulson made his $700 million in investment banking, Goldman Sachs, and that he has surrounded himself with people from that firm, hopefully the “professional management” and “skillful resource base” essential to successful crises resolutions. Mr. Paulson has effectively eliminated much of Goldman Sach’s competition, and is currently forcing prudent banks that did not participate in the subprime mortgage craze to sell stock to the government, thus watering down their stock and harming their prudent shareholders. Yet an environmentalist who loves birds, believes in global warming and gives priority to the gap between rich and poor cannot be so bad; we think he was just another cork swept up the creek, and got caught with his pants down. A man who earns millions upon millions year after year must believe he is doing something right, and tends to stay the course.

Successful government interventions targeted debt relief programs to distressed retail borrowers to restrain the adverse effect of financial distress on the real economy; the U.S. administration has been dragging its feet in that respect, preferring to bail out banks instead of blanketing the entire nation with immorality. Now that delinquent borrowers are getting some relief to forestall foreclosure, others, who have been paying their debts, have an incentive to default to get into the program.

Perhaps the most historically successful technique of all is simply to get the presses running and inflate the country out of the debt, giving debtors raises in the process, which may allow them to believe that they have avoided immorality. Watch the treasury yield curve for current clues.

Now the information provided by the International Monetary Fund and World Bank researchers may or may not shed some light on the wisdom or the mood of the Stock Market in respect to the 2008 bailout plan. No doubt such studies should give our financial gurus cause to pause for thought instead of running around from one plan to another like chickens with their heads cut off yet still exercising their political instincts. The studies may provide useful guideposts, but we must admit that the data is rather thin, and, in respect to AMCs, merely anecdotal. One researcher remarked that “general principles have proved elusive,” and we expect them to remain elusive until the private capitalist business cycle gives us a thousand manias and panics from which we may get a representative sample to induce hypothetically general principles to see if they are deducible in current affairs. But international state capitalism might save us the trouble long before we have sufficient empirical data to work with.

Now pundits are wondering who came up with the latest bailout feature, the partial nationalization of banks via “capital infusion” or purchase of stock with taxpayer money. A few people are giving and taking credit for the proposal. They might have consulted with stealth statesman George Soros, whom the new president should appoint Treasury Secretary so he could turn the post down yet be honored for his untaken good advice over the last few years.

We are loath to suggest that they got their capital idea from Hugo Chavez’ suggestion, that 51% of the stock in national and state banks and other crucial corporations be purchased by the U.S. government, and that a handsome proportion of the profits from that 51% be reinvested in national health care and social security funds. If the entities in question refuse to cooperate, Mr. Chavez recommends involuntary dissolution or full nationalization.

However that might be, we now await word from the Stock Market and opinion polls and crystal balls on what the future holds in store as a consequence of the latest salvation plan. In the alternative, we might admit that credit is a confidence game, and stop depending on other people or things external to restore our confidence. What we need is faith. We want instant salvation: we want to be born anew from the liquidity. But it is difficult to make people have faith in anything, particularly in their fellow creatures if not in the supreme personality. One thing is certain at this historical juncture: we desperately need better confidence men and women.

Radical Constructivism

2008-08-04T09:13:00.000-07:00

“A reliable description of the behavior emanating from the box may suggest it has been whitened, but nothing about the black box and our relationship to it has changed. It remains unopened and openable, provisional, as black as ever. Knowledge gained from using this model is based in profound ignorance. One cannot, therefore, insist on rightness and should tread warily, respecting the different view of others.” article on ‘Cybernetics’ in Encyclopedia of Science, Technology and Ethics.

SOROSIAN I. RADICAL CONSTRUCTIVISM

The everyday reader may be somewhat familiar with the age-old controversy over the usual philosophical dichotomies, such as mind and body to begin with, and between subject and object, self and world, ideal and real, mind and matter, and the like; but s/he may be unfamiliar with the Constructivism label placed on the old bottles, a new name for the academic approach that generally emphasizes the subjective side of the divisive debate, a side that was strangled in Russia in favor of materialism even though many of the Russian Constructivist artists were Bolsheviks. Therefore let it be known that so-called Constructivist thinkers in the West have built up a constructive ideology of knowledge, an epistemology, or rather an anti-epistemology, called Constructivism. In sum, whatever we know is manmade or constructed, and nothing else, including the objective nature of man the maker, not to mention the self, can really be known. Our ideologies, sciences of ideas and of things indicated by ideas, our ways of actively looking at the world and our principles of behavior, are mental or moral constructs. Therefore Constructivist educators, for example, encourage students to actively construe things as working hypotheses rather than learn everything passively by rote, a constructive approach that was once limited more or less to the elite. Reactionary teachers have raised objections to “anything-goes constructivism,” insisting that traditional restraints must be observed, for nature and society does and must set conditions on what anyone can learn.

Postmodern artists do not call themselves Constructivists today, as did certain painters and installation artists of the revolutionary Russian avant-garde. Yet there are a number of constructive thinkers who have embraced the Constructivism label for what it’s worth. For example the highly esteemed cyberneticist and cognitive psychologist Ernst von Glasersfeld has almost milked the construction metaphor dry with his so-called Radical Constructivism. Mind you, first of all, that he could give a hoot whether we know and agree with his Radical Constructivism or not: he merely offers his conceptual construction as a “metaphor” for us to take it or leave it at will – come to think of it, we cannot think without metaphors.

In his 1970 paper, ‘Cybernetics, Experience and the Concept of Self,’ Professor Glasersfeld’s self-construction, based on the perennial myth of the enduring-I, seems radical enough: “If the self, as I suggest, is a relational entity, it cannot have a locus in the world of experiential objects. It does not reside in the heart, as Aristotle thought, nor in the brain, as we tend to think today. It resides in no place at all, but merely manifests itself in the continuity of our acts of differentiating and relating and in the intuitive certainty we have that our experience is truly ours.” Yet his constructivism is not as radical as he construes it, for while dabbling at length in ambiguities, he carefully plants an objective hedge around his subjective constructivism, attributing obvious physical constraints to his inability to walk through his desk as if it were not there; even so, he claims those restraints are not due to the independent existence of his desk itself but to the “particular distinctions” that his “sensory system” enables him to make.

Inasmuch as we original thinkers reject the traditional notion of truth, that the truth is out there, objectively speaking, for our knowing, as long as we take our revolutionary notions seriously and refuse to perjure ourselves by claiming that any one theory of truth, including our own, is true, our meaning of the term ‘radical’ vaguely coincides with Professor Glasersfeld’s. Of course our tolerance does not extend to the traditional notion of truth, just as Luther’s tolerance did not extend to the truth as the Church sold it. Professor Glasersfeld admits that the constructivist revolution is frightening: “To relinquish the inveterate belief that knowledge must represent something that lies beyond our experience is, indeed, a frightening step to take. It constitutes a feat of de-centering that is even more demanding than the one accomplished by a few outstanding thinkers in the 16^th century who realize that the earth was not the center of the universe.”

Everyone used to need physical and metaphysical grounds to stand upright on, with feet planted on earth and head in the heavens. But now the substances we depended on have been pulled out from under out feet. God is dead; Nature is dead; Existence is dead. If there is any heaven left presided over by traditional authorities, Constructivism would relieve us of same. What could be more radical than that? The word ‘radical’ is rooted in ‘root’, meaning the origin of a thing or of the universe itself, an origin generally thought of as something pristine, the true nature of a thing, or perhaps as the first cause or self-mover unstained by its effects. Just what that is, we do not really know, although Gnostics claim to know God the Creator, for the pure principle is obscured by a very long and complex history. As for radical people, we think radicals, whether they stand on the left or the right or in between somewhere, are those persons who would somehow liberate us from natural or social constraints; otherwise we would pay them no mind. It appears that radicals of both wings have total freedom in mind; but their final freedom or utopian outcomes are in effect totalitarian states, where freedom is total obedience, supposedly voluntary obedience instead of unwitting, no doubt intentionally representing the natural domination of the race at its origin, before humans became self-conscious of their subjective struggle against objective constraints.

Mr. Glasersfeld, in his ‘Introduction to Radical Constructivism’, informs us that Giambattista Vico was “the first true constructivist,” for Vico answered, way back in 1710, “the main question which radical constructivism attempts to deal with,” which is, “If…our experience can teach us nothing about the nature of things in themselves, how, then, can we explain that we nevertheless experience a world that is in many respects quite stable and reliable?” Professor Glassersfeld interprets Vico’s answer: “As God's truth is what God comes to know as he creates and assembles it, so human truth is what man comes to know as he builds it shaping it by his actions. Therefore science (scientia) is the knowledge (cognitio) of origins, of the ways and the manner how things are made. Vico's battle cry ‘Verum ipsum factum’ – the truth is the same as the made (factum and ‘fact’ both come from the Latin facere, to make!) – has been quoted quite frequently since Vico was rediscovered in our century as a cultural historian and a philosopher of history. His revolutionary epistemological ideas, however, are rarely mentioned, let alone explicated. According to him, the only way of "knowing" a thing is to have made it, for only then do we know what its components are and how they were put together. Thus God knows his creation, but we cannot; we can know only what we ourselves construct.”

We have scanned a number of the constructivist professor’s papers for further mention of God to no avail, although Giambattista Vico is mentioned therein many times. Apparently there is no room for the radical notion at the very root of Vico’s own philosophy of history, whose principle is Divine Providence, in the professor’s Radical Constructivism. Giambattista Vico, whose father taught him to be self-taught when he was kept home from school due to an injury at age 7, is considered to be an original thinker because of his profound influence on philosophers after him, particularly those who disagreed with the cogito ergo sum that Rene Descartes was so sure of as if his rationalization was the metaphysical principle of all human truths. Of course Descartes proved that God exists, but God might as well not have existed for all the good so much lip service did anyone in those days. Vico accused Descartes of being unoriginal, of concealing his sources, gathering “the fruit of that plan of wicked politics, to destroy completely those men through whom one has reached power.” Even worse, “Descartes has done what those who have become tyrants have always been wont to do. They came to power proclaiming the cause of freedom. But once they are assured of power, they become worse tyrants than their original oppressors.” Vico humbly replaced Descartes’ cogito ergo sum, “I think therefore I am,” with his own principle, ‘verum et factum convertuntur’, “the true and the made are convertible,” or ‘verum esse ipsum factum’, "the true is precisely what is made.”

Mind you that Vico’s ambition was to reconcile “the best philosophy, that of Plato made subordinate to the Christian religion,” therefore we imagine that foolishness counts for more than human wisdom when the fools concerned place their faith in Jesus the Christ – we think the author meant that divine revelations may be better known to the uneducated than to the learned men whose commonsense has been converted into nonsense. Vico dismissed Descartes' notion that clear and distinct ideas are the source of truth: "The mind does not make itself as it gets to know itself, and since it does not make itself, it does not know the genus or mode by which it makes itself." Vico was moved by his Maker to subordinate man’s so-called essential nature, his rational power, to the providence of the only being that conforms to the self-made, creator-creation principle; namely, the Supreme Being, or if the pagan term is preferred, God. In other words, God is the only true Constructivist. Since man is made in God’s image, he can know his own works, but he cannot know truths except by images or representations. Indeed, humankind has declined from the original purity of the singularity. Effete and meaningless rationalizing rules the academic world with artificial, pedantic constructions. Abstract thinking instead of imaginative action wearied Vico. Abstraction was a “vice” to which we are condemned, as far as he was concerned, in marked distinction to the power of "construction," which resides only in God. Loving utility was the principle of Vico’s ethics. He proposed three cures for the alienation from unity, the last one being destruction followed by a return to the age of gods.

It appears that Mr. Glasersfeld has no God other than the autonomous self to perfectly know what has been wrought. Mr. Glasersfeld thinks that his radical perspective, which happens to be neo-Darwinian, has in fact freed him from conventional ignorance, therefore he belongs to the minority rank, that of original or uncommon thinkers: “The only aspect of that ‘real’ world that actually enters into the realm of experience, are its constraints…. Radical constructivism, thus, is radical because it breaks with convention and develops a theory of knowledge in which knowledge does not reflect an ‘objective’ ontological reality, but exclusively an ordering and organization of a world constituted by our experience. The radical constructivist has relinquished ‘metaphysical realism’ once and for all, and finds himself in full agreement with Piaget, who says: ‘Intelligence organizes the world by organizing itself.’”

Once radical constructivism has freed us from conventional thinking, which has at its root the notion that we are victims of our environment, we can be fully responsible for our behavior: “One need not enter very far into constructivist thought to realize that it inevitably leads to the contention that man, and man alone, is responsible for his thinking, his knowledge and, therefore, also for what he does. Today, when behaviorists are still intent on pushing all responsibility into the environment, and sociobiologists are trying to place much of it into genes, a doctrine may well seem uncomfortable if it suggests that we have no one but ourselves to thank for the world in which we appear to be living. That is precisely what constructivism intends to say… We build that world for the most part unawares, simply because we do not know how we do it. That ignorance is quite unnecessary…. For constructivists, all communication and all understanding are a matter of interpretive construction on the part of the experiencing subject and, therefore, in the last analysis, I alone can take the responsibility for what is being said on these pages.”

Now all that might fit nicely into the prevailing ideology of radical individualism, that if something goes wrong, then it is the individual’s fault, if only the person speaking, the almighty constructive subject, were not a plural “we” instead of a solipsistic subject. How we as perceptive, windowless monads are to communicate with one another let alone act on one another remains to be seen after reading Leibniz. Perhaps constructive cyberneticists or behaviorists will heat up the black box that absorbs all colors, that it might turn brilliant white, bringing out all colors in equal intensity. Or, to dignify a single puppet master, we might go along with the status quo as if this were the best of all possible worlds. Or perhaps we may follow Malebranch, and presume that our behaviors are merely occasions of God’s unfathomable pulling of invisible strings every which way behind the scenes instead of an illusory complex of natural causes and effects including the causes and effects of self-made men. Or, instead of counting on millions of years of evolution, we might prefer to take responsibility as a WE, and take a quantum leap to faith in order to overthrow the power elite who would rather have us blame ourselves for our faults instead of them, and construct a TOTAL for ourselves to identify with, in sum, a Utopia or Heaven on Earth. WE would then be Radical Constructivists. I for one have faith in indefinite Nothing, for Nothing is perfect.

Sorosian Russian Constructivism

2008-07-24T16:32:00.000-07:00

Back to the future of Western culture
V. Tatlin, Monument to the Third International
“However, if I may say so,” Nicholas Petrovich interjected, “you deny everything or, to put it more precisely, you are destroying everything…. But it’s essential to construct as well.” To which Bazarov the Nihilist replied: “That is not our affair…. First, we must make a clean sweep.” Ivan Turgenev, Fathers and Sons (1862)
Back to the Future of Art
Constructive people lead constructive lives. We are tool-making, weapon-wielding, self-conscious beings. If it were not for the manipulative hand, the marvelous mind would be inconceivable. We manipulate matter and alter its forms to put it to good use and to protect ourselves. We fancy that the whole wide world is of our own making. Our cultural constructs and successful cultivation of nature gives us cause to believe that the world was given us to do with as we will, to master and remake to our own liking. When we are in fact destructive, we are creatively destructive: We destroy natural constructs and use the ruins to build our own, and then ruin them in turn to build better ones. If there must be, for example, a regime change to rid the world of a destructive political construction, we must build a better one in its place. A reconstruction in the image of our constructive, northwestern establishment must be founded on the southeastern ruins. In order to make and remake the world, we individuals must begin with the mental constructs or social bridges our elders inculcate in us, and then rehabilitate or renovate those mental buildings. We may even attempt to raze them entirely and totally rebuild our selves from the top down, to verily construct a New Man and New World out of nothing, as absurd as that might seem:
“Ostrezemsya ot Starovo Mira,” “We Renounce the World,” pronounced the Worker’s Marseillaise, adopted by the Provisional Government as the new country’s national anthem after the October Revolution. A whole new meaning of history had to be constructed. “We the people are the children of the Sun, the bright source of life; we are born of the Sun and will vanquish the murky fear of death,” Maxim Gorky’s Children of the Sun had rejoiced in 1905. In his 1907 story, Confession, Gorky coined the word Godbuilding: the masses or “Man, master of things” becomes immortal God and works miracles. In the 1913 Futurist opera, Victory Over the Sun, an avant-garde collaboration of Russian artists inspired by P.D. Ouspensky’s cosmic consciousness and by an eclipse. The “cheap and pretentious Sun” of Enlightenment’s sacred Reason would be captured and cast into history’s dumpster. Immortal futurist strongmen, namely the ‘Futurelandmen’, would march even beyond rational geometry to the super-rational realm and finally announce, “All’s well that begins well and has no end; the world will perish but there is no end to us!” “The future is our only goal,” effused the Futurists, whose manifesto of destruction espoused originality for its own sake, that new trails might be speedily blazed by artist-gods from the obscure, pregnant O-origin of the instant now. Aleksej Kruchenykh’s libretto included such “alogical”, anti-historical gibberish as “Jeered, scanda luvs!” The subtext was clear: To hell with tradition! Down with language and thinking! Death to pretty, prostituted art!
Kruchenykh, the central Russian Futurist of his day, was the master word-juggler of the trans-mental, proto-Dadaist, tongue-twisting folk language dubbed zaum. The sound poems of the zaumniks were constructed to cheer people up by releasing them from the prison of conventional language, and to inspire them to decipher the riddles of zaum’s coined, borrowed, and barely recognizable words. In a 1917 letter, Kruchenykh wrote of zaum itself as “a riddle…. The reader is curious first of all and convinced that zaum means something, i.e. has some logical meaning. Hence one can sort of catch the reader by a worm-riddle, by mystery. Women and art have to have mystery; to say "I love" is to make a very definite commitment, and person never wants to do that. He is covert he is greedy, he is a mystifier. And he seeks, instead of I - e [I love], something equal and perhaps special - and this will be: lefanta chiol or raz faz gaz . . . kho - bo - ro mo cho - ro and darkness and zero and new art! Does an artist intentionally hide in the tree-hole of zaum?” In 1919, a collaboration of zaumniks including Kruchenykh called themselves Company 41° and published within the only issue of their group’s newspaper a manifesto declaring in part: “Company 41°, unifies left-wing Futurism, and affirms trans-reason as the mandatory form for the embodiment of art. The task of 41° is to make use of all the great discoveries of its collaborators, and to place the world on a new axis.” Another member of the group, one Zdanevich, declared: “Meta-logical Futurism [zaumny futurizm] sets itself the task of realizing in words the facets of experience which could not in any way be realized by our predecessors, so long as poetry was dealing with words that tried to make sense. For this purpose, Futurism creates meta-logical words.” Some of the zaum constructions can be roughly translated, such as this poem from Kruchenykh’s pen:
Iskarioty Vy / nikudy / Ya sam sebya predal / ot bol'shogo smekha / boltayu nogami / puskay iz ukha techot dryan' / sud'i – koryto / noch' i den' / grom i svist / dlya menya - / odno..... / polotentse pokazyvaet kulak (Iscariots you are going /Nowhere / I have betrayed myself / from big laughter / I swing my legs / let junk flow from the ear / judges are a trough / night and day / thunder and whistling / for me it's -- / all the same / a towel shows a fist.).
Vladimir Lenin let the constructive enthusiasts rave although their metaphysical inclination smacked of subjective idealism hence gave off the pungent odor of stupefying, religious opium – never mind that his narrow-minded, materialistic version of Marxism, his idolization of Karl Marx and Frederick Engels, his high-minded moralism stunk to the high heavens of religious bigotry. As far as Lenin was concerned, there were only two philosophical parties, idealism and materialism. As a matter of fact, some mystically inclined artists were intuitively denying the independent reality of the material world altogether, and were calling their idealism constructive realism. They had been deeply influenced by the theosophical notions of the Russian spiritualist, Madame Helena Petrovna Blavatsky, not to mention the speculations on the Fourth Dimension of the Russian mystic and “hyper-space” philosopher, P.D. Ouspensky. P.D.O. gave little truck to the third dimension, which he believed blinds us to the higher dimensions; he praised artists for freeing humankind from the third dimension, saying, in 1911, that “all art is just one entire illogicality.” In the final analysis he would deem them mad, although he himself had managed to square a circle: “The Tao is a great square with no angles,” he claimed.
“Today we have advanced into a new fourth dimension of motion,” announced Kazimer Malevich, idealistic leader of subjective Constructivism and designer of the set and costumes for Victory Over The Sun: “We have pulled up our consciousness by its roots from the earth. It is free now to revolve in the infinity of space. Go forth, art workers; in your movement you will find the new Realism of the world.” Five of Malevich’s paintings exhibited at 0.10 The Last Futurist Painting Exhibition referred to the fourth dimension in their titles; for instance: ‘Movement of the Painterly Masses in the Fourth Dimension.’ The ideological debate amongst constructivist artists was between seemingly opposing factors, mind or subject and matter or object. Should the easel be consigned to the rubbish heap and the artist turned into an engineer, a productive member of communist society? Or was their a compromising, third way, a transcendental, spiritual synthesis of art and technology?
Immanuel Kant had set the stage for the controversy with his Kantian ‘Copernican Revolution’: instead of observed objects affecting the discerning subject, the subject’s constitution affects the way objects are observed; that is, we cannot truly represent or know the object in itself, we can only know what the mind constructs. The possibility of knowledge is therefore in the subject, hence the philosophy of transcendental idealism. On the other hand, there is the natural law of cause and effect; although nature in itself may not be known because of the subject’s constitutional limits, it may be adequately represented. How then, can a human being be a responsible moral agent? That’s easy: Construct two worlds for him, one natural or physical, a world of the senses subject to natural law, the other rational, a world of mental apprehension subject to moral law. Man, the rational animal, can spontaneously cause his own effects. For a moral law to apply for the benefit of everyone, it must be universal. That is, certain principles are willed as universal laws, to which all should be true for their own good. Wherefore people constitute or construct morality and moral truths. Kant’s constructivism was too liberally construed by the transcendentalists, including the New England Transcendentalists, who got the Kantian gospel secondhand, and then surmised they were in direct touch with God; they did not heed his warnings about the inherent fallacy of the transcendental logic. In fact Kant was ambivalent over the distinction between constructivism and representationalism.
Malevich distrusted representational art because he doubted the senses; ideals were real for him and others who turned realism downside up: “The forms of Suprematism, the new realism in painting, are already proof of the construction of forms from nothing, discovered by Intuitive Reason,” he rationalized. “I have destroyed the ring of the horizon and escaped from the circle of things,” he announced.
It is difficult to argue with Nothing for Nothing is nondenominational. As the source of all forms, Nothing is perfect. When nothing works, return to Nothing because Nothing really works. Why bother with sordid, limited things themselves when the supreme, archetypical Forms can be constructed from Nothing?
“To reproduce beloved objects and little corners of nature is just like a thief being enraptured by his legs in irons,” Malevich confessed. Still, Malevich would, for good measure, insist all along that his art of nothing in particular, abstracted not from things but from Nothing, was essentially utilitarian or practical, that it could be put to objective, that is to say particular, uses. After all, had he not constructed a cup and teapot for the State Pottery? In any event, who would want to be a village idiot when one could be a prophetic art personality?
The objective or materialistic Constructivist faction differed amongst themselves, at least philosophically if not in deed. For instance, brother sculptors Naum Gabo and Antoine Pevsner found their spiritual reality in natural law. They set realism back on its feet: in their ‘Realistic Manifesto’, invoking Art “erected on the real laws of Life…. We construct our works as the universe constructs its own, as an engineer constructs his bridges, as a mathematician his formula of the orbits.” True, Naum Gabo opposed the conversion of artist into engineer; he believed art should maintain its independence in the new society; yet his art was progressive, alluding to the scientific and technical transformation of mind over matter.
Vladimir Tatlin, Malevich’s longstanding arch-opponent, had all ready raised his ‘Art Into Life’ banner to reject the artistic conventions of useless, decadent society. He did not want his work exhibited at 0.10 The Last Futurist Painting Exhibition with Malevich’s “amateurish” productions, so their works were hung in separate rooms, setting the stage for the constructivist schism. Amongst Vladimir Tatlin’s designs was an efficient stove, an outfit of clothes for workers, a flying machine, and his monumental design for a functional tower to be twice the height of the Empire State Building, Monument to the Third International. Although we may classify him as an objective Constructivist in one sense, he is perhaps best known for his so-called nonobjective or nonrepresentational constructions; such self-presenting objects, called “installations” today, are hopefully unique inasmuch as the constructions do not stand for or represent other objects, least of all the nonexistent ego of the art personality who constructed it. Tatlin had ventured to Paris to beseech Picasso to take him on as an apprentice, and was refused; while at Picasso’s studio he noticed Picasso’s relief constructions, and the collages made from junk; he returned to Moscow and proceeded to construct his own, which he dubbed “constructions” – henceforward the art world had “Constructivism.”
Both Malevich and Tatlin had been Larionov Circle members. In 1911 Mikhail Larionov and Natalya Gontcharova founded a romantic art movement called Rayonnism, inspired by the discoveries of physicists, especially those of Albert Einstein. Their manifesto of 1913 paid tribute to utilitarian art: “We declare the genius of our days to be: trousers, jackets, shoes, tramways, buses, aeoplanes, railways, magnificent ships…. We deny that individuality has any value in a work of art…. Here begins the true feeling of art: a life which proceeds according to the laws of painting as an independent entity.”
For the Russian Love of Germans
It is impossible to draw a line between the subjective and objective factors when viewing works of art, let alone the art of the Constructivists. I believe it was Friedrich Wilhelm Joseph von Schelling who said that, objectively speaking, it did not matter whether one proceeded from object to subject or from subject to object; the difference is prejudicial; the presumably voluntary subject is usually emphasized over the determined object to dignify Man.
Schelling, who was close to the most remarkable romantic, Johann Wolfgang von Goethe, had corrected the great fault of romanticism, its unlimited subjectivity, by restoring objectivity to the scene, where nature would have independent, equal rights. Nature is the name for everything positive or objective, while spirit signifies nature’s negation in self-consciousness. Yet nature as he interpreted it was criticized as being too transcendental, unempirical, and even silly. Both nature and spirit had had an identical substratum in his earlier philosophical compromise, according to his Identitätsphilosophie, which naturally identified his Naturphilosophie and Transcendentalphiloshie as parallel complements to ideal whole. But he later took up the opposition of the subjective or negative and objective or positive philosophies, elevating the negative or intellectual over the positive or physical. The absolute or universal may be realized on Earth in the individual subject through practical activity. Schelling opined that the highest symbolic activity, philosophy, is apparently best documented by art, hence he has been called an aesthetic idealist.
According to some philosophers, philosophy is a sort of poetry. Now authoritative authors may disagree with Schelling’s aesthetic prejudice for figurative art, which implies that Leonardo DaVinci was right in his belief that the eye is nobler than the ear, that visible art is superior to poetry, and insist that thought is freer than sight, for the eye must conform to its object as well as to the will of the perceiving mind. The creative author would probably side with Oscar Wilde’s averment that Literature, whose essence is living criticism, namely the negative, is superior to objective art, mistakenly deemed immortal because it is fixed in deadly reality:
“The statute is concentrated in one moment of perfection,” declared Wilde in The Critic as Artist. “The image stained upon the canvas possesses no spiritual element of growth and change. If they know nothing of death, it is because they know little of life, for the secrets of life and death belong to those, and those only, whom the sequence of time affects, and who possess not merely the present but the future, and can rise from a past of glory or of shame. Movement, that problem of the visible arts, can be truly realized by Literature alone. It is Literature that shows us the body in its swiftness and the soul in its unrest.”
Kazimir Malevich, who artfully criticized art by reducing art to almost nothing, would no doubt understand what Wilde was driving at; but the Russian Constructivists strove to take the individual out of art to realize the socialist ideal, monumentally, while Wilde realized that “there is no fine art without self-consciousness, and self-consciousness and the critical spirit are one; the beauty of art is found in the unity of style, and that beauteous unity “is of the individual.” Furthermore, “Self-denial is simply a method by which man arrests his progress, and self-sacrifice a survival of the mutilation of the savage, part of that old worship of pain which is so terrible a factor in the history of the world.”
The absolutely transcendental idealist and German nationalist Johann Gottlieb Fichte disowned Schelling for polluting metaphysics with physics, insisting that the Not-Self, i.e. the world, was not at all a proper subject for philosophical study. Schelling returned the favor, calling Fichte’s philosophy intellectually abstract and frigid. Fichte’s arid perspective eventually led Fichte to propose an autarkic, totalitarian state, The Closed Commercial State, wherein the wealth and comfort of a few could only be a sign of social disease: “The underlying duty to the state has been overlooked; this is to install each citizen in the possession suitable to him. It is only possible to achieve this last, however, if commercial anarchy is removed, and if the state encloses itself as a commercial state in the same way as it has been enclosed with regard to its legislative and judiciary functions.”
Schelling’s reconciliation of matter and spirit as complements had other great enemies: The intuitive aesthetic and religious aspects of Schelling’s philosophy had alienated the rationalistic and constructivist presumptions of Georg Wilhelm Friedrich Hegel, his old roommate and good friend. They slung mud at one other until death did them part. Schelling finally elevated revealed religion over art. Hegel believed the Absolute could be discovered by reason, while Schelling intuited that the Creator does not realize the Divine Design all at once because, he reasoned, “God is Life, and not merely Being.” Speaking transcendentally, he noted that the Godhead is not a divine substance but is rather “a ferocious purity only approachable by the pure of heart; the impure, still sullied by being as they are, would be consumed by flames.” His ultimate surrender to irrational divinity offended the materialistic-minded atheists, the Young Hegelians, who were convinced that religion was the foundation of tyranny. They embraced Hegel’s dialectical, historical method but abandoned Hegel’s Absolute, the All or One, whose ultimate goal was Self-consciousness through the gradual liberation of humankind from its material blindness. Hegel eventually viewed the state as the manifestation of the general will, which all free and rational individuals will obey or else; but an earlier tract coauthored with Schelling compared the state to a spiritless machine, “hence the state must perish.” As far as the Young Hegelians were concerned, mankind was its own redeemer, the real Christ, and God to boot. Religion was a self-projection; hence the reverence for God is actually self-reverence. The time for feeling and thinking is over; now is the time to act, to establish heaven on Earth, as it were. Religion, the root of all evil, must be therefore attacked – Marx and Engels would eventually focus on economics instead of religion as the determinant of their constructivist history.
Saving God from Young Hegelians
King Frederick William IV persuaded Schelling to lecture in Berlin in 1841 to defend religion from the onslaught of the atheists. Therefore it behooved him to split the subject-object hair and to raise the ultimate bone of contention, the Absolute, in this case God, as high as he could without repudiating reason. To that end he promised to reveal a new philosophy of revelation, which was never forthcoming while he lived. The lectures were attended by such notable auditors as Mikhael Bakunin, Søren Kierkegaard, and Friedrich Engels.
Engels reported that the leading lights of science occupied the seats closest to the rostrum; behind them were jumbled people from all walks of life including old doctors and ecclesiasts; Judaism and Islam wanted to see what Christian revelation was all about. He proceeded to insult Schelling in the first paragraph of his December 1841, ‘Telegraph No. 207’: “Two old friends of younger days, roommates at the Tilbingen theological seminary, are after forty years meeting each other again face to face as opponents; one of them ten years dead but more alive than ever in his pupils; the other, as the latter say, intellectually dead for three decades, but now suddenly claiming for himself the full power and authority of life.” And later: “Schelling presents the entire development of philosophy…as dependent on himself to begin with, and then not only negates it, but with a flourish…presents it as a luxury in which the spirit indulges with itself, a curio collection of misunderstandings, a gallery of useless aberrations.” As if that were not enough, “he allocates to Hegel a position among the great thinkers precisely by deleting him in reality from their number and by treating him as his creature, his servant.”
Instead of simply spinning Hegel’s philosophy to the right in favor of Christian religion, taking no credit for himself, Schelling reportedly credited Hegel with originally establishing the philosophy of identity as the absolute philosophy, which was negative philosophy, by absorbing the positive aspects of all other philosophies, and then posit itself as positive – we are reminded of how black absorbs all colors, and when heated becomes white hot. Engel’s notes has Schelling repudiating the still repeated claim that Schelling specifically denied that the absolute could be discovered by scientific method, that he instead relied on “intellectual presupposition.” He said the supposition simply was not made, reported Engels. First of all, “the philosophy of identity is not a system of existence, and, as concerns intellectual perception, the term in question does not occur at all in the presentation of the philosophy of identity which is the sole and only one of the earlier period that I recognized as scientific.” Fichte, with whose philosophy Schelling said he did not want to complete break with, arrives at intellectual perception through his immediate consciousness of the ‘I’. But in “intellectual perception” the ‘I’ is no longer regarded as being subjective, it enters the sphere of thought and thus its existence is no longer immediately certain. Accordingly, intellectual perception would not even prove the existence of the ‘I’.” However that might be, if Hegel “demands proof of the being of the infinite power he goes beyond reason; should the infinite power exist, philosophy would not be free of being, and we must ask whether something prior to existence can be thought. Hegel denies it, for he begins his logical with being and proceeds directly to an existential system. But we affirm it, by beginning with the pure power of being as existing only in thinking.” As for the philosophy of revelation, “revelation must include within itself something more than reason – yet something that can be attained only by exercising one’s reason.”
The Constructive Projection
The reconciliation of abstract subject and concrete object is certainly of great import to many of us since the divorce of mind and body and the scientific murder of God, and even the more so to those religious personalists whose symbol is the fish and whose heaven is beyond the lines, colors and forms of earth, where disembodied persons are somehow maintained forever if not resurrected intact, on a perfect plane. We may or may not sympathize with Wassily Kandinsky’s prejudice of 1935: “I see no essential difference between a line one calls “abstract” and a fish…. The capacities of the fish are necessary extras for the fish itself and for the kitchen, but not for painting. And so, not being necessary, they are superfluous. That is why I like the line better than the fish – at least in my painting.” In 1918, The Institute of Artistic Culture had delegated the creation of a teaching program to Kandinsky. That program, published in 1920, was his pet theory based on theosophical assumptions, of a new, profound relation between artists and society. Abstract artists had, in his humble opinion, a loftier vision than others, and the purest means of communicating it, composed in such a way to produce ecstasy in the mass audience. As for non-objective art, he disagreed with Malevich, and said that once the natural bonds are severed, the resulting, so-called art is merely decorative, like a rug or necktie.
The Constructivist realists and idealists alike had an objective: to break with history and create a new world. They repudiated the re-presentation of natural objects and other traditional objects of art, and, although they had abstract objects in mind, they called the presentations of such abstractions “nonobjective” to signify their revolutionary break with current convention.
To the best of my knowledge, neither bodiless minds nor formless intelligences have been actually perceived by themselves nor ably represented; likewise, it seems impossible to behold the ego or ‘I’ as an object per se. We may refer to the existence of independent egos as one of the Universal Ego’s great mysteries. In art we might speak of degrees of abstraction, but abstracted from what? From the basal reality of the pyramid, making our inductions as we ascend the slope from particulars to universals, testing our inductions with deductions along the way? Or shall we deduce conclusions from the transcendental reality beyond its axiomatic apex, the unknown realm where a priori Ignorance is dictator? All Hail to Nothing! Nothing is Perfect!
The budding soviets needed factories to overcome revolutionary chaos and save the world: Scientific Industrial Materialism would naturally win out over Ivory Tower Art. Alexei Gan gave vent to matter in his 1922 manifesto, Constructivism: “Tectonic emerges and forms itself based on the one hand on the characteristics of Communism, and on the other on the expedient use of industrial materials. The word tectonic is taken from geology where it is used to define eruption from the Earth’s center. Tectonic is a synonym for the organic, for the explosion from an inner being. The tectonic as a discipline should lead the Constructivist in practice to a synthesis of the new content and the new form. He must be a Marxist educated man who has once and for all outlived art and really advanced on industrial material. The tectonic is his guiding star, the brain of experimental and practical activity. Faktura is the process of the working of material…. Construction must be understood as the coordinating function of Constructivism…. Construction discovers the actual process of putting together….All hail to the Communist expression of material building!”
The official crackdown on self-destructing Constructivism would come soon enough; the centralized, Socialist Realism of official Proletarian Culture, subject to the so-called Union of Artists, would drive out the passionately debating Constructivists, whether they were painterly purists or utilitarian craftsmen. Many would decamp and flee; some of the most foolhardy of those artists who had been agitated by revolutionary chaos would even face man-made reality and die in Joseph Stalin’s camps. Before then, hearsay has it that Vladimir Lenin had said that a monopoly on art would be harmful and impractical. He was caught up by the science-fiction prospects of a utopian Planet Earth himself: “If we succeed in making contact with the other planets,” he told H.G. Wells in 1920, “all our philosophical, social and moral ideas will have to be revised, and in this event these potentialities will become limitless and will put an end to violence as a necessary means of progress.”
The new flying machines would eventually take man where no man had gone before, to space, the final frontier. The nation was gripped by aviation fever: “Workers, Take to the Air!” was the motto of Aeroflot’s fundraising campaign. In 1915 Kazimir Malevich offered up his ‘Suprematist Painting: Aeroplane Flying.” The Supremacists did not believe that their elemental abstractions, the destructive reduction of fine art to line, color, and geometrical form was useless; rather, the idealizations would somehow serve as models for practical projects. Malevich thought he had transcended space and ventured into eternity through his frame of reference, the square: “Hurry up and shed the hardened skin of centuries,” he urged after painting a square in revolutionary, anarchic black, “so you can catch up with us more easily.”
The Black and White of Atomic Being
Black, Malevich said, swallows up all colors. He replied feelingly to critics who said that his Black Square was a desert and that all they loved had been lost: “The desert is filled with the spirit of non-objective feeling, which penetrates everything.” The usual objects are not required to stimulate feeling; rather, the supreme feeling is in the self-moving, godly act of creation, not in the accidental objectives: “It is difficult for you to get warm in the face of a square,” he responded to Alexander Benois, “accustomed as you are to get your warmth from a sweet little face…. The secret of the incantation is the act of creation itself, and it flies in time, time which is greater and wiser than swine.” And even further, after painting his White Square on White Background of 1918, he effused: “I have torn through the blue lampshade of color limitation and come out into the white. After me comrade-aviators sail into the chasm – I have set up the semaphores of Suprematism – Infinity is before you.”
We may not overemphasize the emotional emphasis Constructivists placed on colors and colorful involvement with black and white. If everything were one color of the same hue, sight would not help us distinguish one thing from another. The power of a primary color in itself, notwithstanding the objects it might be a property of, to evoke emotion is well known to artists and color therapists and gang leaders to mention a few. Malevich’s plain white was not as virginal as his sacrificial bride seemed. White is the combination of all colors in equal proportions; the subtraction of colors results in various colors until black remains. Black is called a color although it has no hue, absorbing all frequencies and reflecting none, and some deem it purest because its stains cannot be seen; but allegedly immaculate white is preferred by most purists, and a black body heated to incandescence sheds the whitest light. In white we are equal in life, and in black we are equal in death. In the infinitude of white space we may be ambivalent, at once glad and terrified. We note well that the Hindu messiah shall appear on a white horse to mark the end of our present dark age and the beginning of yet another golden age. Any Aryan god worth his thunder bolt has a white elephant for his steed, upon which he puts down the darkness; and the white prejudice ran rampant in sheets in the West as the Ku Klux Klan, just as the Royal White Terror, its white being the symbol of capitalism, opposed the French Revolution. The Almighty Terrorist himself appears in the East as a white bull, perhaps as the horned Moon-god, Crescent Sin, whom Moses saw on the Mount as if he were the Moon himself, and the birth of a white buffalo on the Western plain signifies the extinction of the white man that the red man may run free again.
“What the white whale was to Ahab,” said Melville’s Ishmael of Moby Dick, “has been hinted; what at times, he was to me, as yet remains unsaid…. It was the whiteness of the whale that above all things appalled me.” White, he notes, has many favorable associations; “Yet for all these accumulated associations, with whatever is sweet, and honorable, and sublime, there yet lurks an elusive something in the innermost idea of this hue, which strikes more of panic to the soul than that redness which affrights in blood. This elusive quality it is, which causes the thought of whiteness, when divorced from more kindly associations, and coupled with any object terrible in itself, to heighten the terror to the furthest bounds. Witness the white bear of the poles, and the white shark of the tropics; what but their smooth, flaky whiteness makes them the transcendent horrors they are? That ghastly whiteness it is which imparts such an abhorrent mildness, even more loathsome than terrific, to the dumb gloating of their aspect.” He recalls the first albatross he saw: “From my forenoon watch below, I ascended to the overclouded deck, and there, dashed upon the main hatches, I saw a regal, feathery thing of unspotted whiteness, and with a hooked, Roman bill sublime. At intervals, it arched forth its vast archangel wings, as if to embrace some holy ark. Wondrous flutterings and throbbings shook it. Though bodily unharmed, it uttered cries, as some king’s ghost in supernatural distress. Through its inexpressible, strange eyes, methought I peeped to secrets which took hold of God. As Abraham before the angels, I bowed myself….” And he speaks of the White Hoods of Ghent murder, of the Southern Seas dominated by the White Squall, of ghosts rising in a milky white fog, of the White Friar and White Nun, of the Whitsuntide and driven snow, the White Tower of London, the White Mountains of New Hampshire.
Malevich might have paid tribute to Nothing as the source of Everything; however, like the almighty one-god before him, he needed painterly elements such as color and line to construct the new world – the Earth was there at the beginning but was formless and void, darkness covering the surface of the deep waters, before the great division. The atoms of popular science would do nicely. “Every solid is a unity of absolutely free units,” Malevich explained along monadian lines, as if each unit were an automaton “and what we see in nature is simply the mass integration of free units and the various amalgamations of steel and stone. This apparent amalgamation, in fact, contains units of many kinds, including space. In other words, the fusion is not total, and thus solid matter does not exist in nature. Therefore everything is linked and at the same time separate in its own motion…. This notion was the impetus for breaking up the visual complexity of a solid and dividing its mass into the separate energies of the colors of Suprematism…. What was understood here was the conscious rejection of the material, or the atomization of the picture…. This process of isolation has created the form of the black or colorless square, a form that in its atomization offered all kinds of other forms, and these in turn were painted many different colors…. Such forms, of course, do not express anything related to the objective world, and in the viewer’s mind they are nonobjective. Consciousness now begins to operate with Supremes, with individual units – the signs of dynamic mathematical connections. Expressing this dynamic functioning is the primary purpose of consciousness. The forms are built exclusively on white, which is intended to signify infinite space.” Furthermore, in an iconoclastic vein: “What Suprematism means to me: the dawn of an era in which the nucleus will move as a single force of atomized energy and will expand with new, orbiting, special systems…. With the atomization of the organism and its liberated units, a violent change is imminent. I think that freedom can be attained only after our ideas about the organization of solids have been completely smashed.” Moreover, “The general philosophical path of these trends leads to the disintegration of things, to the non-objective and to Suprematism, as a new utilitarian body and to the spiritual world of phenomena…. We are going to work on new creative constructions of life….”
Such literary manifestations were required to make the artists’ intentions manifest; otherwise, without a manifesto to explain their seemingly hysterical conduct, they might have been deemed mad. Of course Malevich, with his reductive geometrical analysis, was no madder than Rene Descartes had been with his analytic geometry. Indeed, perhaps Malevich did not go far enough, from natural reality to non-objective “Painterly Realism”, and regress from the white light into the non-dimensional point, the black ace or kali from which creation ensues, to emerge as a truly painterly painter; that is, a painter without a painting, a purely pretentious art personality.
Just what would become of communistic humankind when nothing stood in the way, no-one could say for sure. A librarian by the name of Nikolai Fedorov speculated that an immortal mankind would be recomposed from the molecules of decomposed bodies scattered throughout space; a reconstruction reminiscent of Christianity’s resurrection as well as the Cabalist’s gathering of the glowing shards from the divine crackpot. The crazy Russian Constructivists were, to use a popular phrase from the Sixties, “spaced out.” It is no wonder that they got a glimpse of the future. If only everyone had placed their faith in nondenominational Nothing instead of fighting over history’s rubble, humankind might be really far out today.
Unwelcome Change
Although we have our doubts about the realization of Utopia or Heaven on Earth today, we still imagine that we are self-made men and women; and as such, we are capable of building an ever-better world. Revolution is out of the question, but reforms worked under such progressive mottos as CHANGE are highly recommended from time to time, although such changes only amount to tinkering with the engine that it might careen more speedily down the track to only God knows where; some say to Perdition, where souls are ultimately lost to hellish communism disguised as heavenly democracy. Now each person is a little construction company, as it were. But contractors are responsible not only for their selves but for others like them, and congregate to construct monumental projects. The advance of Western civilization to freedom is inevitable despite Arnold Toynbee’s warnings, therefore the Administration urges us to “welcome change.” A condominium complex is bound to be constructed in one way or another, perhaps along the squared lines of Piet Mondrian’s spiritual communism, to which postmodern towers rebelliously raise classical and baroque objections.
Piet Mondrian, Dutch artist and Theosophist, nearly of the same artistic mind of Malevich in Russia, foresaw the extinction of both private and street life, which would be replaced by what we might today call a cubic commune of the Borg; or perhaps we might compare it to the notorious glass city of Eugene Zamiatin’s dystopian novel, WE, surrounded by banned, primitive nature. Abstract art, said Mondrian, although it is opposed to natural representations of things, is not really opposed to nature: “It is opposed to the raw primitive animal nature of man, but it is one with human nature. First and foremost there is the fundamental law of dynamic equilibrium which is opposed to the static equilibrium necessitated by the particular form. The important task of all art is to destroy the static equilibrium by establishing a dynamic one. Non-figurative art demands an attempt of what is a consequence of this task, the destruction of particular form and the construction of a rhythm of mutual relations, of mutual forms, of free lines…. In order that art should not represent relations with the natural aspect of things, the law of denaturalization of matter is of fundamental importance. In painting, the primary color that is as pure as possible realizes this abstraction of natural color.”
The city Mondrian foresaw was “a unity formed by planes composed in neutralizing opposition that destroys all exclusiveness.” Mind you that “the relationships of lines and colors and forms had been concealed in the old art, but these relationships in the “new art are made clear through the use of neutral or universal forms…. Because these forms become more and more neutral as they approach a state of universality, neoplasticism uses only a single neutral form: then rectangular area in varying dimensions. Since this form, when composed, annihilates itself for lack of contrasting forms, line and color and completely freed.” Lest the reader become un-tethered, s/he must know that non-figurative art, or neoplasticism, demonstrates that so-called art “is not the expression of reality as we see it, nor of the life which we live, but that it is the expression of true reality and true life, indefinable but realizable in plastics. Thus we must carefully distinguish between two kinds of reality, one which has an individual character, and one which has a universal appearance.” Yet the person is bound to disappear in a social communion of sheer abstraction; in effect, the utopia conceived would be totalitarian.
No doubt the individual cannot be human and contrive a cementing identity in the absence of defining relationships. We are self-conscious, self-disciplined creatures who exercise individual freedom in social order. Absolute freedom from resistance, or freedom without order, is chaos, within which nothing certain, including a willing individual, can exist at all. The human order is a moral order, in the old sense of ‘moral’, when moral order meant mental order and denoted an exercise of mind over matter. ‘Man’ or ‘Manu’, “he who measures out thought”, just as ‘Ma’ measured him out, is a rational creature who construes what is at hand, who thinks things out in proportion to his determinations of what is good and evil for him; as far as Man is concerned, the world and everything in it is for him. He cultivates the world accordingly; his ‘culture’ is essentially mental. His constructions may seem to be artificial or unreal but are as natural as he is. Certain Brahmins have opined that the natural world including man and his artifices is unreal, that everything at hand is the work of Maya, the wayward wife who deceives her stormy lord with her illusive charms – in truth he deceives himself, for he is s/he. Triune Maya is the Maker, the Making, and the Made. She might be an illusion but she is a real illusion at that, and she is most real in comparison to the Unknown God or Ineffable Reality, the Absolute Freedom or Nothing we would have but which would destroy us as individuals if we actually had it. Wherefore let us make the most of her even when she is the only one, that non-dimensional Point from which the All proceeds; and then, having given due obeisance to the Ace, poets like gamblers may build their wonderful houses of cards, thinking that ‘poet’ means ‘maker’ of fortune instead of its ‘finder.’ Let constructive philosophers think they have found wisdom when they say I think therefore I am what I think I am.
The yellowed manifestos of Constructivist artists may seem logically absurd, yet they were struggling to reflect the most modern, scientific way of thinking about phenomena. Their testaments certainly make better sense than the terse, nonsensical utterances that abstract painters and installation artists slap onto their brochures nowadays. It might behoove the latter to hire professional philosophers to write their copy; professional philosophers have a knack for making self-contradictory nonsense out of commonsense and keeping laymen from knowing it by putting them to sleep on the first page. The Russian Constructivists were naturally fascinated by the scientific, technological and artistic advances in the West; they wanted a big piece of the action for their new country; they looked to Paris and painted a Russian picture, so to speak, an impression of the “constructive” temperament of their time.
The frustrated idealists of the Russian avant-garde received Social Realism in return: many of them were arrested, imprisoned, executed, defamed, silenced, or exiled. Kazimer Malevich’s works were confiscated and he was prohibited from producing and exhibiting art. He did manage to decorate his coffin with Suprematist motifs before he died of cancer, impoverished, in Leningrad. Alexei Gan died in a labor camp. Vladimir Tatlin, defamed and discredited, returned to figurative painting and worked in theatre design before he died of food poisoning in Moscow. Wassily Kandinsky, now considered to have been one of the world’s greatest modern artists, got out of Russia early and did relatively well as a professor of art at the Bauhaus in Weimar, and as an artist in Berlin and Paris. Since Piet Mondrian was not in Russia, he was not persecuted by the Stalinists – he wound up in New York, where he died shortly after moving into a pleasant artist’s studio on East 59^th street.
National Socialist America
Most Americans know very little about the Constructivists, or so they think. Americans certainly have a can-do constructive attitude for the most part. And their popular art, from late modern to postmodern, seems absurd and crass – that is why many liberal-minded people like it. Monumental installations are in vogue – we recall that the Russian Constructivists had charged themselves with the development of a monumental art. National socialism is creeping up on the citizens of the world’s sole superpower, but since the repression of the criminal will to absolute individual freedom or power has been voluntarily internalized, each individual having a certified warden implanted within, instead of being forcefully suppressed from without, a false sense of security prevails, or at least it did until the monumental Twin Towers fell and the authoritarian administration brought the country to the verge of moral and financial ruin.
The American philosopher George Soros, who, as a young Jew disguised as a Christian, survived the battle of Communists and Nazis over Budapest, and who has over the past few years raked in billions of dollars gambling on financial bubbles, believes we are facing the political-economic disaster of our lifetime. He recently forsook the love of money and his distrust in hypocritical philanthropy to rid this great nation of ours of its right-wing administration so that our sins might be openly confessed and a better country constructed accordingly. The Germans and the French, who have a great deal of experience with authoritarian movements, were as alarmed by the pre-emptive, might-is-right approach of the Bush Administration as Mr. Soros, and they were duly ridiculed as well, before they got on board.
Mr. Soros’ worldwide philanthropic activities aim to produce an open society of free thinkers and speakers, to deconstruct totalitarianism wherever it presides and liberally redistribute power to the people so that compensatory social justice might be done. He has funded numerous groups given to vociferously voicing political complaints. But the most of us do not complain much, not any more, at least not publicly, for we have forgotten how far complaints can get us, especially when made in concert. Entrepreneurs of all sorts can make a bundle examining consumer complaints and responding appropriately with new or improved products, or with promises thereof. Opposition to corporate globalization, following in the footsteps of the Reformation, still draws a protesting crowd; and Mr. Soros, who thinks globalization is a good thing, if done rightly, listens carefully and makes a few constructive suggestions. Now he is crying, “Wolf!”
Never mind; many of us are too busy scraping up a living to take to the streets, anyhow. Thank goodness that a living is still available to forestall left-wing revolution and right-wing reaction. At the very least, we are free to make ourselves miserable in the pursuit of happiness, which all too often means the pursuit of material wealth – the U.S. Constitution phrase adopted by the founding fathers, whose main interest was naturally vested in local real estate, initially followed the French construction, “life, liberty, and property,” until “property” was deleted and “the pursuit of happiness” inserted in its stead.
A Pessimistic Vein
We would like to have a constructive attitude and therefore resort to constructive criticism of the status quo; wherefore we would not wind up this monologue in a pessimistic vein. But we are beginning to suspect that our ubiquitous constructivism, which sometimes smacks of destructive nihilism, the clearing of the ground with nothing but a parking lot to take its place, or has an odor of that more constructive constructivism that we one way or another employ for our own good to avoid or restrain the evils usually associated with the opposition to our subjective will, name objective nature, may be one of those evils, perhaps an evil cultivating the others. The warning of Nicolas Berdyaev, the Russian socialist who favored the Revolution but was opposed to the implementation of Marxism, and was then tossed out of Russia and became an anarcho-Christian personalist, comes to mind:
“The idea of the existence of eternal principles of life has a double significance. It has a positive significance when freedom, justice, the brotherhood of men, the supreme value of human personality as that which must not be turned into a means to an end, are acknowledged as eternal principles. And it has negative significance when relative historical, social and political forms are made absolute, when concrete historical institutions, represented as organic, are given the prestige and authority of sacred things…. It can be otherwise expressed in this way, that the eternal principles of social life are values which can be realized in the subjective spirit and not concrete forms which can be realized in the objectification of history.”
Berdyaev’s communism was spiritual. His worldview is often confused with egoistic existentialism; he was actually a personalist, the person of course being the human being who is at-one with the Divine Person. For him there was nothing sacred in this world which can be transferred to eternal life. That is why there “exists a moral obligation that the world should come to an end and be judged by a higher judgment.” Egocentricity, for Berdyaev, was the original sin, an “illusory, distorted universalism, a false perspective…under the power of objectivization, which it seeks to turn into an instrument of self-affirmation…. Man is the slave of the surrounding external world, because he is the slave of himself.” His idolatrous cultural constructions are bound to deteriorate: “Culture always ends in decadence, that is its role. The objectivization of creativeness means that the creative fire is dying down.” Moreover, “Creativeness is a fire, while culture is already the quenching of that fire.” Beware litterateurs, for the cultural elite have substituted literature for life, and live an unreal, visionary existence, slaves of literature and the last word in art. Oscar Wilde would have Berdyaev’s sympathies in respect to culture, for, once the monument is set in concrete by its creators, it becomes a dead thing.
Many years ago I encountered Ernest Becker’s book, Escape From Evil, and I rushed impatiently to the index to look up the definition of evil, which I expected to be referred to there as “Evil, defined, page number….” No such luck. After perusing parts of the interesting book over the years, it dawned on me that the evil alluded to is the escape from evil. Now Ernest Becker’s best-known book is The Denial of Death, wherein we learn that our personalities are defensive constructions, masks, as it were, with which we face or hide the fear of death. The elements of the personal mask, its various lines, colors, and forms or molds, are provided to the individual by the group, and the individuals, in turn, return their own perspectives to the social construction or mask that we might refer to as a group’s “worldview.”
The repressed and therefore subconscious fear of death produces death-denying, fanatic worldviews, such that the ensuing killing sprees and massive destruction gives one cause to believe in the existence of a death instinct or death wish beside the survival instinct or death fear. The externalization and objectification of the unconscious cause of that general anxiety to a particular enemy or scapegoat is on the hate side of hate-others-based group-love. Rational and tolerant worldviews supposedly have the opposite effect; however, rationality is suspect since even the most destructive worldviews can be rationalized, say, as beneficial creative-destruction. And tolerance may compromise the striving for moral integrity - the denial and repression of humankind's native either/or conscience may produce a permissive attitude that leads to the devolution of civilization and demoralization of humankind into anarchy. But anarchy would not last for long, just as random terrorism has never been tolerated for long by any people: when order has deteriorated into disorder, order will take root and organize itself once again. Unconsciously motivated, polarized worldviews are the irrational products of the repression of the fear of death. Tolerant, rational, pluralistic illusions of less conflict and of more opportunities for individual development are needed to counteract them.
So the evil might lie in the escape from evil, as we fight evil with evil and make war for peace. In the seventh chapter of Escape From Evil, entitled “The Basic Dynamic of Human Evil,” Ernest Becker quotes the psychoanalyst Otto Rank: ‘All our human problems, with their intolerable sufferings, arise from man’s ceaseless attempts to make this material world into a man-made reality…aiming to achieve on earth a ‘perfection’ which is only to be found in the beyond…thereby hopelessly confusing the values of both spheres.’
“The whole edifice of Rank’s superb thought,” Becker summarized, “is built on a single foundation stone: man’s fear of life and death…. Men’s fears are buried deeply by repression; only occasionally does the desperation show through…. Men live in a dimension of care-freeness, trust and hope…achieved by the symbolic engineering of culture, which everywhere serves as an antidote to terror by giving them a new and durable life beyond that of the body.”
Becker then acquaints us with Wilhelm Reich’s perspective laid out in The Mass Psychology of Fascism. Reich laid out the guiding principle of ideology, which monotonously harps, “We are not animals….” Plague-mongering politicians promise to engineer the world, to provide people with unlimited rights and prosperity. “They are the ones who lied to people,” Becker recapitulates Reich’s explanation of fascism, “about the real and the possible and launched mankind on impossible dreams which took impossible tolls of real life.” Once you disassociate yourself from animal nature, deeming yourself good and deserving of eternal meaning, then you can launch a political campaign against the animals, whosoever they might be, Jews, Arabs, Gypsies, Rumanians, Poles – no group is exempt but your own, for which you have a hate-others-based love.
We note that tolerance towards Muslims is publicly preached today, but intolerance prevails in certain private circles, where they are often lumped together under the oxymoronic rubric, “Islamo-fascists,” coined by pseudo-conservative neo-barbarians, and thought of as uncivilized terrorists to be eradicated like cockroaches.
Ernest Becker then raises the specter of the Jungian shadow. “To speak of the shadow is another way of referring to the individual’s sense of creature inferiority, the thing he wants most to deny….” He notes that Jung said that the person naturally wants to get away from this inferiority; he wants to “jump over his own shadow” by “looking for everything dark, inferior, and culpable in others.” That is to say, guilt-feelings are projected onto others until the aliens are eliminated.
We turn to Carl Jung’s works and discover that the so-called shadow is imbued with more animality than Jung’s other psychological archetypes, and that man’s animosity is aroused when his animal spirits are repressed for long, inciting the beast within to end its flight when cornered and to strike back in order to survive, which are after all normal responses. No doubt the shadow is a wellspring for realistic insights, and of course a source of inspiration for creative people, who are quite constructive when they have an outlet, without which they might run amok. Of course the human mind has enabled the race to extend its claws and wage war on a vast scale, to literally lay waste to the world that a better one might be constructed. It is said that war is required for the moral improvement of the race, and it is purported the shadow that would burst civilization’s chains and set man loose for awhile, perhaps to build an even better prison house.
In the Shadow of Wotan’s Clutches
Jung effused on the reappearance of Wotan in an essay by that name. Yes, Wotan, the archaic “god of the storm and frenzy, the unleasher of passions and the lust of battle, the superlative magician and artist in illusion who is versed in all secrets of an occult nature” had possessed the German folk, as a small part of the “veritable witch’s Sabbath” following the Great War, when “Everywhere fantastic revolutions, violent alterations of the map, reversions in politics to medieval or even antique prototypes, totalitarian states that engulf their neighbors and outdo all previous theocracies in their absolutist claims, persecutions of Christians and Jews, wholesale political murder,” and so on. “Gods are without doubt personifications of psychic forces (that) have far more to do with the realm of the unconscious” than consciousness. Wotan, “the furor Teutonicus” has seized Germany and inspired Germans to “a state of fury.” Why, “a hurricane has broken loose in Germany while we still believe it is fine weather.” Most impressive is that “one man, who is ‘obviously possessed’, has infected a whole nation to such an extent that everything is set in motion and has started rolling on its course towards perdition…. All human control comes to an end when the individual is caught in a mass movement. Then the archetypes begin to function…. The nationalist God has attacked Christianity on a broad front. In Russia, he is called technology and science…. It is always been terrible to fall into the hands of a living god…. We who stand outside judge the Germans far too much, as if they were responsible agents, but perhaps it would be nearer to truth to regard them, also, as victims.”
Jung’s detractors say that he himself fell into Wotan’s clutches. They cite Jung’s essay, which quoted Nietzsche’s poetic paeans to Zarathustra’s Unknown God, and his affection for blond, blue-eyed youth as part of the evidence. Not all Germans went along with Hitler, and many were those publicly opposed the construction of the Third Reich and perished as a consequence. Quite a few took cover, concealed their identities, laid low.
Still, we can understand the allure of the shadow, and the charming effect of a demagogue who promises to forge unity from chaos, a unity that entails marching off to war, to kill for world peace, to free the world for the global construction of one’s own political order, to build yet another Roman Empire, a Fourth Reich, a Pax Americana. Therefore let us confess, forgive and forgo. Let us let go of our favorite scapegoat, President George Bush, and let us forgive the overwhelming majority who were enchanted by him even though his charisma fell far short of a Hitler or Mussolini, a Lenin or Stalin. Let us build ourselves a better launching pad and space ship, and then go where no man has gone before, to space, the final frontier.
Indeed, while Senator Barrack Obama, a virtual Jungian shadow to the party that freed blacks and then betrayed them during Reconstruction, recommends the radical expansion of social justice and alternate energy programs, Senator John McCain, although he urges handing over vast tracts of protected offshore lands to the oil companies, has distanced himself from the oily administration, recommending the expansion of the space program, with manned flights to Mars and beyond, something that he thinks would inspire all mankind. Such a program might do more for the welfare of humankind, for if man remains where he is, on Earth, he shall certainly perish when the next round of super-volcanoes blow and the planet is struck by comets and cleansed by tsunamies, perhaps due to God’s wrath over gays in the military, so let him take women with him on his space voyages. That an interstellar advance of Western civilization is entirely possible, and that women may not only man but command the most advanced space ships, has been amply demonstrated by Star Trek Voyager programs.
We are of naturally being facetious here, but there is some truth in humor, and we believe the vision will be realized, just as the fantastic science-fiction visions of the Russian Constructivists nearly a century ago have come true in several respects. After all, we moderns have, like the materialistic Russians who followed suit some time ago, idolized technology and science, despite the warnings of Friedrich Schelling and Arnold Toynbee.
Machined Life
Members of the most advanced civilization on Earth, led by the United States of America, upon whom an attack is an attack on civilization per se, are far more communistic or socialistic than they think, and even the more so where they swarm, in urban areas. Of course they do not think of themselves as unconscious zombies, but as self-motivated automatons, each one a god in his or her own right, and therefore free to do as each wills, that each might have his or her own; yet each will is not free, but is resigned, seemingly voluntarily, to circumstances beyond its control, doing its part as planned, depending on the occasion, in the system or machine. And the machined part is not an individuated person, but is in effect the machine, even when opposed to other parts, for in that opposition the machine works. When certain parts squeak loudly and the machine lurches or begins to grind to a halt, the tinkerers do some tweaking here and there, the oil companies squeeze the oil can and grease the wheels, and the mathematically pre-established device progresses harmoniously along the way providentially provided. Of course the ultimate machine has only one moving part, the archetypical wheel itself, and in itself the simple wheel has no parts at all.
Now it would matter not if human beings were machines, as some scientists suppose, as long as they were happy machines. Happiness is, for the constructivist, a subjective consideration, even though he tends like everyone else to blame his concrete circumstances or so-called reality for his bad moods, praising himself when things go well. The objective construct, whether simple or complex, if it exists at all, apparently cannot be known in itself by the constructivist, so it might as well not exist as it is if it really is at all. What does the constructivist care about objective reality, anyway? His reality is after all artificial. He makes the most of nature, whatever that is or is not. But never mind the metaphysical nonsense made out of commonsense. The Gothic spires and skyscrapers piercing the sky are real, and those buildings please him very much because they are his godly doing. The objective reality of the Moon was firmly established when man set foot upon it, and the reality of the holocaust is only denied by fools.
Needless to say, a constructive thinker might not be too disappointed to hear that his insubstantial mental constructs, that his freedom, his self, his god, his state and so on are illusions, for they are, after all, his constructs; besides, he can still lead a constructive life with his illusions, live up to his beliefs as if they were true. But he might not be so happy to hear that he is merely a randomly constructed machine or an organic analogue thereto, that his so-called soul is at the very least nothing and at the most a simple, solipsistic atom, a windowless monad unchanged except by internal perception; and that his social progress from simplicity to complexity has the same destination regardless of the political vehicle taken to the hive. Indeed, he might be convinced that there is something to reality, that he exists and the state has him in chains, and that he must revolt to secure his happiness, which he places in the notion of freedom from such restraints.
Eugene Zamiatin, a naval architect and fiction writer, did not like the way the road to utopia was being paved by the Bolsheviks. He had supported them early on; in fact he had been imprisoned and exiled for doing so; but he questioned the government’s attempts to stifle criticism and clamp down on the arts after the Revolution. “The word is kept alive only by heretics,” he proclaimed to all who would listen. “The only weapon worthy of man is the word; fortunately, all truths are false: the essence of the dialectical process is that today’s truths become errors tomorrow.” Moreover, “Today is doomed to die, because yesterday died and because tomorrow will be born. Such is the wise and cruel law. Cruel because it condemns to eternal dissatisfaction those who already today see the distant peaks of tomorrow; wise because eternal dissatisfaction is the only pledge of eternal movement forward, eternal creation.” He dared to address the following words to Joseph Stalin, in a letter requesting permission to emigrate: “No creative activity is possible in an atmosphere of systematic persecution that increases in intensity from year to year…. I beg to be permitted to go abroad with my wife with the right to return as soon as it becomes possible in our country to serve great ideas in literature without cringing before little men.” Of course he was imprisoned. Fortunately, Maxim Gorky influenced Stalin to release him for emigration – he died in Paris a few years later.
WE are the World
We know Zamiatin’s dystopian (anti-utopian) novel, WE, best of all. Units of the One State live behind a wall separating the urban nation of glass buildings, organized by primitive mathematics, from primitive nature. They dress in identical uniforms, and have numbers for names. Every aspect of life, except for two hours of Free Time for walking around or writing, is closely regimented by mathematical formulas; the scheduling Tables of Hourly Commandments are posted in each residence. Sexual intercourse is by appointment only, made by couples who fill out pink tickets for the purpose – the glass walls can only be shaded for privacy during those sexual sessions. The names of the characters are derived from the specifications of Zamiatin’s favorite icebreaker, the St. Alexander Nevsky. The protagonist, D-503, a mathematician, is working on the construction of the Integral, a spaceship designed to "integrate the grandiose cosmic equation" and spread the gospel of the One State throughout the planets. The One State depreciates human imagination, wherefore D-503 is haunted by the counter-thought, the basis for imaginary numbers, the square root of minus-One. D-503, the Adam of urban Paradise, meets and falls in love with I-330, the Eve of primitive nature - she is a member of a revolutionary group that resides in the jungle. Temptations are rife. People are playing around with higher mathematics, chaos ensues, and we urge the reader to borrow or buy a copy of the book for their edification, and decide whether or not the glass city is heaven or hell or an admixture of both. If it be hell, then let the criticism be constructive, in the form of a heavenly city built beside it.
-WE-

SOROSIAN Justice

2008-06-07T08:11:00.000-07:00

A trader by the name of David Silverman, chief operating officer of the Intellectual Property Exchange International and author of such articles as ‘Is the Market a Random Walk?’ cites the “good news” that any aspirant who is willing to work hard at the trade can compete and succeed at trading. That is the gospel in this reportedly democratic nation of ours, and it behooves the novice to believe it with all his heart and soul, and to act accordingly, despite the fact that most of us know quite a few virtuous people who have failed miserably.

Mr. Silverman gives us good cause to wonder how successful he is at trading, for he has paraphrased another old saw, that those who can, do, and those who can’t, teach: Those who can make a living at trading, trade, and those who can’t trade, well, they write articles about it. To be fair, there are always exceptions to the general rule, and ways to make millions if not billions of units of exchange on them: George Soros, the greatest speculator in the world, inspired in his youth by John Menard Keynes to be a successful trader, economist and philosopher, has written several books on trading and political economy. Of course Yours Truly, who writes easily for long hours for the abstract joy of nothing in particular, would enjoy consuming David Silverman’s income, such as it is, yet he would enjoy giving away George Soros’ billions to a far greater extent.

Mr. Soros’ philosopher-hero, Karl Popper, quoted Karl Marx’s opinion on hard work: “The kingdom of freedom actually begins only where drudgery, enforced by hardship and by external purposes, end; it thus lies, quite naturally, beyond the sphere of proper material production.” Professor Popper believed that Karl Marx’s ‘sole aim was to open the way into the non-materialist kingdom of freedom for all men alike’, for Marx had said, “The shortening of the labour day is the fundamental pre-requisite.” Freedom is the intended end of Marx’s dialectics as well as Hegel’s, and Professor Popper was careful to point out that Marx cherished the spiritual world. Where that world or this one ends is uncertain.

Mind you that George Soros’ “thing” or main theme is his reflexive notion of uncertainty. The future is unknowable, no matter how many long hours one might work hard to build it to one’s liking – alas, one might dislike it if it were had! The hard-working author of a Utopia might come to a bad end when reality catches up with him despite his good intentions, as will those upon whom he might successfully impose his utopian scheme by the while. Wherefore the Delphic injunction ‘Know Thyself’ enjoins us to know our limits. That does not mean that we should not push the envelope and follow up on hunches from time to time. We may know more than we think we know, and we might just get lucky.

As we have noted in our chapter on Sorosian Hunches, “Almost every extraordinarily successful person takes a bow to Lady Luck or Bon Fortuna after giving standard lip-service to the virtues of hard work and long hours.” Apparently those who believe along with Karl Marx that abundance can be obtained for all without long, grueling hours in the pit are thieves, communists, welfare recipients, heirs to considerable fortunes or otherwise plain lucky. To the best of our knowledge, Mr. Silverman has yet to publicly bow to Lady Luck; short of a windfall he may never do so, wherefore we wish him Good Luck.

We also pointed out that no aspiring trader may be as successful at trading as George Soros, for there is only one George Soros allowed per planet; he happens to be the only trader whose fate places him at the head of the flat end on the x-axis of the bell-shaped curve representing the distribution of the loot. We call it loot because trading seems to be a vicious business to begin with, and all the more so if the gains are not shared with everyone in the final analysis. Indeed, our progenitors elaborated on the brutal redistribution habit, celebrating and apportioning the kill according to their respective folkways; for example: the spoils were laid out on the butcher’s altar; the blood was drained and the cup was passed around by the high chef; the remains were duly dedicated to the Fire; the fat, liver and kidneys were shared by the sycophantic cooks; choice cuts went to the noblest hunters and their ilk; of course mates and kids got their preferential shares; scraps were tossed to the loners skulking on the fringes; the smoke, made pungent with herbs, rose to pacify the ferocious god.

“If you are not willing to treat trading as a full-time endeavor, you have no chance against traders like me,” Mr. Silverman averred in the April 2008 issue of ‘Stock, Futures, and Options, The Official Journal for Personal Investing.’ “What the casual trader does not seem to get is that professional traders are pigs, and not cute Wilbur-types from Charlotte’s Web, but mean razorbacks that will eviscerate traders with their tusks and eat their brains.”

We suspect there is something inherently vicious about the business that spurs so many of us to the hard labor that does the masses so much good on the way to the slaughter house: “The Root of evil Avarice,” wrote Bernard Mandeville of his Grumbling Hive, “That damned ill-natur’d baneful Vice, was Slave to Prodigality, that Noble Sin, whilst Luxury Employ’d a Million of the Poor, and odious Pride a Million more. Envy its self, and Vanity were Ministers of Industry.” And, “The grave Industrious were the Same. All Trade and Places knew some cheat, no calling was without deceit.” Moreover, “Thus every Part was full of Vice, yet the whole Mass a Paradice.” Paradoxically, “Such were the Blessings of that State, their Crimes conspired to make them Great.” The moral of the story: “T’enjoy the World Conveniences, be famed in War, yet live in Ease without great Vices, is a vain Utopia seated in the Brain. Fraud, Luxury and Pride must live.”

But Mr. Silverman has chosen Swine over social Bees, and more analogically so, for Pigs are almost Human in Mind and Body although the human Being nevertheless is wont to reject their mental and physical Organs. Yet Yours Truly, for one, takes prodigious Pride in being a Member of the Campbell Clan, the Clan of the Wild Boar, whose Honour has been Vouched for by the Most Reliable of Medieval Bards and Faithful Senechals. We are not to be outdone by Bees, for We Boars have not only our Royal Sort, but our Fair Share of Traitors, Sharpers, Parasites, Pimps, Players, Pick-Pockets, Coiners, Quacks, Shysters, Wheeler-Dealers, Stock Brokers and Analysts.

Besides Scotland, Hungary too has had its fair share of Swine. We note well that a Nazi debarking from a Budapest tram shouted, “Get out of my way, piglet face,” at George Soros and his father, Tivadar, who was wearing the Jewish star to assess how gentiles would react to his Jewishness. Tivadar told George that the local yahoo was no doubt referring to George as a young pig, for “pig face” would be the appropriate term for the father. The family went underground, where George learned to root around surreptitiously and sell the masses short, taking care not to be seen urinating or be attended to by the wrong doctor lest his reviled identity were revealed and he be hung from a lamppost or sent off to Auschwitz to be made into a lampshade. And now it is said that the Hungarian razorback capitalizes on calamity, charging from the brush at the last moment to gorge on bloody fools.

As a matter of fact, George Soros has been accused of maliciously engineering several slaughters instead of merely feasting on the inevitable plunges from overvaluation to deadly reality. The calumny heaped on him by neoconservative detractors and fundamentalist ministers places him in league with the Devil. He is of course a traitor to his adopted country, this great nation of ours, the United States of America, the sole superpower on which an attack is an attack on civilization itself. We know he gave around fifty million dollars to “radical leftist” organizations such as MoveOn.org in a futile attempt to defeat President Bush’s presidential campaign. Removing the so-called Texas jackass from office was a life-or-death project for him; he underestimated the momentum of bull on four legs.

Not only is George Soros allegedly a greedy billionaire who believes his money or reputation for making a lot of it can buy him stature as an economic sage, philosophical prophet and philanthropist, he is also a self-hating or anti-Semitic Jew, or so his worst critics say. Just for starters, they say, he exhibited his cowardice by passing himself off as Christian to survive the war instead of waltzing into a death camp. And during a December 1988 60 Minutes program, the moderator insinuated that the thirteen-year George helped the man posing as his godfather confiscate Jewish property as untold thousands of Jews were being slaughtered. Young George, having assumed the name Sandor Kiss, had in fact tagged along with an employee of the Agriculture Ministry, one Mr. Baumbach, ostensibly his godfather, while Mr. Baumbach inventoried an estate left behind as a bribe by a wealthy Jewish aristocrat who emigrated to Lisbon. George merely dallied around the grounds while the inventory was being taken, or so the story repudiating the nasty gossip goes. As for the Christian disguise, his father commanded him: “This is an emergency. If we remain law-abiding citizens and continue our current existence, we are going to perish. So we have to make alternative arrangements.”

George Soros’ critics noted that the ovens are barely cold and Jew-haters want to fire them up again, yet Mr. Soros recently went so far as to publicly state that he did not support Israel. Even worse, he purportedly equated Yassar Arafat the terrorist with Ariel Sharon the beloved freedom fighter when he said that people in the Bush administration have the same mentality as those two; insidiously implying that Mr. Sharon, like Mr. Arafat and the head of the Bush administration, was a murderous thug or some sort of war criminal. And he might as well have called Mr. Bush a Nazi out right, for he said that post-Bush America should confess its sins and go through the same de-Nazification process that it advanced in Germany – if the United States fails to recognize its mistake, said Mr. Soros, its future will become increasingly grim.

And his detractors say that he is a self-hating billionaire to boot, an expletive-deleted postmodern liberal who, for instance, supports euthanasia, abortion and homosexuality while opposing abolition of the so-called double-taxing Estate Tax abhorred by the greatest spokesman ever for the neoconservative rich, President Ronald Reagan, may he rest in peace. Undoubtedly George’s philanthropic pretensions are ungodly and politically motivated, they say; but to return to his profitable business, he is called a callous speculator, a hit man with an itchy finger who is virtually devoid of genuine sympathy or concern for the many thousands of people whose lives are ruined by his financial machinations. Indeed, they say he is an economic animal through and through, relying accordingly on animal instincts.

We might ask: Why should he care about others when he is simply playing by their rules and happens to make a killing? And what does he do with his ill-gotten gains after the bloodbath? He must feel somewhat guilty for making a fortune on the rules. He has given billions away, which has been the right thing for the wealthy to do since time immemorial – what we need in this great nation of ours is a National Annual Potlatch Competition, to see who can give the most away – the winner will no doubt give it all away, and throw himself on our charity.

Again, if people do not want to get hurt, let them change the rules democratically, George Soros has advised. Voltaire, hero of the Cartesian Age of Reason, said, “If you want good laws, burn those you have and make yourself new ones.” George Soros thinks that experience has proven the Cartesian spirit of certainty obsolete, but that is not to say we should be lawless. He has done many good works, at least according to liberal democrats. Politically motivated education is his main philanthropic mission; the truth that there is no absolute truth is the gospel propagated. There are certain rules he would like to see changed, and he puts his money where his mouth is. For one thing, people should have a right to freely flap their lips without getting their tongues cut out, and, once made literate, they should communicate freely without getting locked up and liquidated; for that a liberal education and an Internet backbone is indispensable. Dictators may be able to intimidate service providers into ratting out dissidents, but they cannot shut the World Brain down. Where there is a will, there is a way to make asses out of local yahoos, so it behooves the power elite to tolerate free speech. In our free country, at least, the radicals can say whatever they want to say, in the alternative media, letting off steam before the pot boils over, and the power elite can still control the mainstream media and do business as usual.

“What’s not to like about George Soros?” some liberal-minded people ask. Besides, there are two sides to a coin: would there be any game left to play without great malefactors-benefactors? In any event, according to George Soros, the particular market would have collapsed whether he had played or not, so he did not mind getting his hands dirty, so to speak. ) “If I had tried to take the social consequences into account, it would have thrown off my risk/reward calculations…. Fortunately I did not need to bother about the social consequences because they would have occurred anyway.” The anonymity of the markets “allowed me to dirty my hands.”

If not him, then someone else would have been destined to play a pivotal role in saving people from even worse consequences of the mania. Where would the bottoms be if short sellers were not around to buy things for a fraction of what they had already sold them for? But Mr. Soros’ has been painted as a thief. Well, why should we care if he were a thief or not, as long as he made billions at it? We tend to celebrate the winners over the most righteous of our kind. But he is not a thief: he plays by the rules, and it avails us not to complain that laws are made by vested interests for their own good, to steal people blind with impunity.

We note well that the very same gods from time immemorial have done both great good and great evil, depending on one’s perspective. Behold the sacred buzzard, ugly grounded, beautiful in flight. The greatest Egyptian god was publicly praised on the same stone for his kindness and his cruelty, and his Egypt was turned into stone. Wherever goods are apparent there shall also reside apparent evils, perhaps even more evil than good. In the event that evil currently exceeds good, have no fear, for life will then be spurred towards its own good in self-defense, in this best of all possible worlds. Yet we may wish that good would exceed evil at all times and even vanquish it in the end. Zoroastrian Dualists logically eschewed the Zurvanian heresy inspired by Judeo-Christianity’s confusion, and adhered to two gods, the good one to eventually overcome the evil one at the end of time – very few Zoroastrians are still waiting. Pierre Bayle in his great, talmudic dictionary admired the good logic of the Dualists. And Bernard Mandeville, during his Enquiry into the Origin of Honour and the Usefulness of Christianity in War, said the most rational opinion is that there is but one God, the Creator, a perfectly good Being without admixture of evil.

“But Reasoning and Metaphysicks must have been carried on to a great Height of Perfection, before the Truth could be penetrated into by the Light of Nature. Plutarch, who was a Man of great Learning, and has in many Things display’d good Sense and Capacity, thought it impossible, that one Being should have been the Cause of the Whole, and was therefore of Opinion, that there must have been Two Principles; the one to produce all the Good; and the other all the Evil that is in the World. And Some of the greatest men have been of this Opinion, both before and since the Promulgation of the Gospel. But whatever Philosophers and men of Letters may have advanced, there never was an Age or Country where the Vulgar would ever come into an Opinion that contradicted that Fear, which all men are born with, of an Invisible Cause, that meddles and interferes in Human Affairs; and there is a great Possibility, that the most Senseless Enthusiast should make a knowing and polite Nation believe the most incredible Falsities, or that the most odious Tyrant should persuade them to the grossest Idolatry, than the most artful Politician, or the most popular Prince, should make Atheism to be universally received among the Vulgar of any considerable Kingdom, tho’ there were no Temples or Priests to be seen.”

The failure of Christian theodicy to reconcile the difference between good and evil in one god, not to mention the attempt to prove that three equals one, has led to the development of critical logic, the assassination of the divine tyrant, and liberal democratic progress beyond good and evil. George Soros has said that he does not have faith in god, nor does he have faith in the Equilibrium maintained by the Invisible Hand of Free Market Fundamentalism, even though the Nobel Prize winning mathematical maximist Professor Gerard Debreu, enthused by Leon Walras’ revelation Supply = Demand, had in 1954 provided mathematical proof of the Hand’s Equilibrium, in ‘Existence of an Equilibrium for a Competitive Economy’; better yet, in his 1959 classic paper ‘Theory of Value: An Axiomatic Analysis of Economic Equilibrium’, Mr. Debreu proved the existence of a price system where aggregate excess demand correspondence vanishes, and even incorporated uncertainty in his certainty. Nor does Mr. Soros have confidence in our ability to forge truths that perfectly correspond to reality. He has had cause from his earliest experiences to fear that things might not work out on a regular basis; some unknown reason or invisible cause might interfere with the best of orders, and we suppose that has made a skeptical philosopher out of him, at least where the absolute truth is concerned.

Now David Silverman has dished up some absolute truth in the form of a “reality check” for investors who would safely profit from globalization: he advises us to apply the “Washington Consensus test,” which he claims is “recognized” by the World Bank, the International Monetary Fund and the World Trade Organization “as the minimum standards by which a country must abide before it can be considered a safe place to invest.” It’s the standard obsequious refrain: Reduction of public expenditures, privatization, deregulation, free trade, foreign investment, free-market determination of interest rates, et cetera. Ultimately, we might as well not have a political government, for business should be our government, and the only reason we need a political government is to protect the interests vested in business and make sure that the police power gives preference to the power elite in the name of their absolutely powerful, singular deity, the self-regulating, anarchic money-god, lest a socialist countermove against their avaricious hegemony gets underway.

Yes, if we know what is good for us, we will obey the dictates of the Washington Consensus enjoyed by the Chosen People at the Center of the Universe, despite the fact that the consequences of the political-economic consensus of Washington ideologues have brought the world’s sole superpower into ignominious disrepute around the world because its practice has made many of the people it would liberate from their traditions, whether they like Washington-style capitalism or not, miserable indeed. That is not to say that the Washington Consensus has been entirely wrong, at least it has not been wrong for razorbacks such as Mr. Silverman, whose stated professional interest is in eviscerating other traders with his tusks and eating their brains. May God help the piglets who get underfoot; they had better join the consensus, and suck hind teat. Then again, maybe not, for progressive civilizations favor not the strongest but the weakest, and the Great Punctuation proceeds, although Mr. Silverman does not feel the hot air of the bursting bubble on his face.

Enter George Soros, the little piggy who got away and made it big and developed a gigantic conscience. He believes in liberalization too, but not the sort that further tramples the downtrodden and makes of the nobleman a gutless and heartless wonder. The self-regulating market of Free Market Fundamentalism must be regulated or it will self-destruct, annihilating the humane substance of humankind. In The Crisis of Global Capitalism, he writes: “To put the matter simply, market forces, if they are given complete authority even in the purely economic and financial arena, produce chaos and could ultimately lead to the downfall of the capitalist system.” Another iconoclastic economist raised in Budapest, Karl Polanyi, had already noted well that a self-regulating market “could not exist for any length of time without annihilating the human and natural substance of society.” A market economy in itself has intolerable social outcomes, Mr. Polanyi insisted; society’s general interest is broader than the merely economic. Of course Karl Marx believed the essence of private capitalism would eventually destroy it.

George Soros may be a mean man in the trading pit, but he is otherwise a man of the Golden Mean. He is in effect a moderate. His liberalism is political and economic; the moral of the story would be embedded in a compromise state. He pleads not for more regulations but for better ones. Fortunately he is not the only voice raised against the regurgitations of the free-market fundamentalist fanatics: on July 11, 2007 the New York Times cited evidence of a growing will to debate fundamental assumptions: “There is too much ideology,” and economics is “often a triumph of theory over fact,” said Professor Alan Blinder. As far as he is concerned, economics is not scientific enough; mathematics may seem scientific, but it does not “generate refutable hypotheses.” Government intervention is of course anathema to the pretended consensus-regurgitators. “What I’ve learned is anyone who says anything even obliquely that sounds hostile to free trade is treated as an apostate,” Mr. Blinder said. Economist David Card chimed in, with “You lose your ticket as a certified economist if you don’t say any kind of price regulation is bad and free trade is good.” According to Economist Dani Rodrik, orthodox faith holds that government regulation is always bad. Professor Fredrick Lee at the iconoclastic University of Missouri-Kansas City academically scoffs at the neoclassical economics ideal, that if the market were left alone it would find a happy balance and we would live happily ever after. By the way, Professor Lee thinks oil companies determine gas prices, not market operations. Professor Robert B. Reich believes the “consensus” has become a mere pretense in the face of the income inequality and dislocation that globalization have helped to create.

Globalization is desirable and private enterprise is better at creating wealth than states, Mr. Soros stated in his book The Bubble of American Supremacy, but market fundamentalists ignore the shortcomings of their anarchic approach, which places faith in the ability of self-regulated markets to obtain equilibrium in the provision of an optimum allocation of resources. Despite Professor Friedrich Hayek’s perfusions on the errors of deliberate construction of social institutions, in marked contrast to their spontaneous evolutionary development, as well as his disparaging remarks on the “mirage of social justice” projected by demagogues, terrorists, tyrants and the like, Mr. Soros maintains that markets by themselves are not able to meet collective needs nor are they “competent to ensure social justice.” He states that the growing social injustice, evident in the inequality between the rich and poor, arises from the fact that the winners of the globalization game are not “compensating the losers” either within states or between states. Apparently a redistribution of income by the welfare state outside of the market mechanism is warranted – Professor Hayek, by the way, did not object to welfare redistribution but rather to the abusive means implemented by states. Mr. Soros observes that the current globalization trend, with its flight from taxation and privatization of government services, is depriving the state of its means to provide for the welfare of the people – a patronal notion provided, for instance, by our forefathers in the Preamble of the United States Constitution.

We might add that government is being effectively reduced to a business bureau, and not a better business bureau at that. The legislature has become a chamber of commerce – Mr. Mandeville might compare it to a whore house, praising the beneficial results of the uses to which it is put.

Our most prudent forefathers used to think that we should live modestly in good times, saving up for a rainy day. But we have become a society of plastic spendthrifts during good times. When the unpredictable flood comes, as it inevitably will, the rich on the high hill shall watch the poor drown and claim that they did all they could to save them. When bad times follow good times, as they inevitably will, the power elite in the center curtail the number of scraps being thrown to the needy on the periphery. The poor and unemployed must bear the brunt of the downturn as the wealthy fortify their luxurious compounds and jet from one conclave to another. Public transportation and police services in poor neighborhoods must be cut when they are needed the most. Fare increases shall be approved by people with cars and imposed on carless people in Miami, for example, where the recession is setting in with a vengeance.

The economic ironies abound: Now that unemployment is climbing rapidly, the director of Miami-Dade’s privatized employment agency called the staff together for its annual retreat. Instead of the usual food, drink, and entertainment in a fine ballroom, the staff, who had saved room in their bellies for food, were told that the number of Workforce employment offices in the Miami area would be reduced from 13 to 4, so they had better start looking for another job – anyone who wanted to save their job might find someone to provide rent-free space. Neither food nor water was provided in the rat-infested meeting room, so the staff went hungry; some of them naturally booed and hissed. By the way, the health plan has been changed – one cancer patient complained that he was required to pay $400 for a diagnostic test. So much for the force of the Workforce: it’s terrible tale may never be told; Miami’s so-called liberal major daily is not interested in the sorry story, although it is of national import and might win a prize.

The Center controls: it holds fast to its wealth and does not mind cutting throats for its own good. Mr. Soros complains that “the countries at the center of the global capitalist system enjoy far too many advantages over countries at the periphery. Perhaps their greatest advantage is that they can borrow in their own currencies. This allows them to engage in counter-cyclical policies, that is, they can lower interest rates and raise government expenditures to fight recessions. The countries at the center are also in control of the IMF and the international financial system.” Many of us looking forward to the government expenditures; we appreciate the $600 scraps, which are already spent on inflated prices even before they are received. And behold what the Center got – of course, we could not exist without the Center. “Whenever the center is threatened,” writes Mr. Soros, “the authorities take decisive action in order to protect the system. As a consequence, the devastation is confined to the periphery.” Since the productive assets of peripheral countries are largely controlled by foreign capitalists, they can repatriate their capital and gut the countries at will. At least we have plenty of sports stadiums in the United States to house people rendered homeless by the massive foreclosure flood.

Mr. Soros sums up three major “disparities” in the global capitalist system, two of which we have touched upon already: the disparity between public goods and private goods; the disparity between center and periphery. The third disparity is the disparity between good and bad governments, a subject that should be especially interesting to Mr. Silverman’s clients. Some countries have good democratic governments like ours, and others have corrupt or repressive regimes. The income gap or inequality looms large in bad countries, which are plagued by armed conflicts and financial crises. The United States, beset with armed conflict and now plagued by crisis, has trended towards bad government for some time, so the primary concern of Mr. Soros in The Bubble of American Supremacy is not his usual concern with the excesses of misguided market fundamentalists but with the “excesses of American supremacists.”

Although Mr. Soros does not believe in the myth of perfect equilibrium wrought by the imaginary Invisible Hand, his selection of the term ‘disparity’ gives us cause to believe that he would like to see a better balance between public and private goods, between center and periphery, and, curiously, between good and bad governments. There is ample room for evil in its parity with good, and a great deal of good will be required to balance the evil on the other end of our teeter-tottering country. Now it appears that the excesses of American supremacists and free market fundamentalists may be curbed by George Soros’ endorsed candidate for President, Barrack Obama. Mr. Soros’ primary concern right now is with bursting bubbles. Given his record for making billions off the pops, the losers shall no doubt be looking forward to social justice in the form of adequate compensation. Justice was really the god of our ancient cultural ancestors, the Hebrews and the Greeks. Only god knows when, but one day justice shall be done. Indeed, in one myth the Greeks had Zeus declare that any person without a sense of justice should be put to death.

Sorosian Hunches

2008-05-27T15:12:00.000-07:00

Once upon a time George Soros was the young Hungarian man named Schwartz Gyorgy who spoke Esperanto fluently because his dad taught it. He was the tyke renamed George Soros, purportedly to hide his Jewish roots. He was the teenager who assumed a Christian identity, avoided the extermination of 500,000 Hungarian Jews, and survived the Communist and Nazi house-to-house battle over Budapest. He was the youth who defected from the Communist regime while attending an Esperanto youth congress, and got a degree from the London School of Economics. He was the man who headed for America with a Wall Street career and Professor Popper’s metaphysical science of scientific uncertainty in mind, the very man who eventually made four-thousand percent on his quantum-leaping Quantum Fund, ringing up a net worth of several billions of dollars in ten years flat. He is the bubble man who thrives on punctured bubbles, the man who profits on market manias and panics, he is the man who capitalizes on the wild swings or extreme disequilibrium of free markets and then philanthropically plunges a goodly portion of the plunder into propagating the political-economic reform of the system that made him rich.

Needless to say, but we repeat it again and again to reinforce the inspiring notion that almost any poor slob can get filthy rich in America if he really wants to, George has done awfully well with his hunches. He is the boom-bust-cycle man, the bubble punctuator who, for example, allegedly broke the Bank of England and ran the Malaysian and Thai currencies into the ground. He is the man who bragged about doubling his money on the mortgage-trust bust among many other things exemplary of the consequences of human fallibility. And he is the man who recently scooped up $4,000,000,000 on the housing crisis. In fact, he considers the current mortgage meltdown and foreclosure run up to be indicative of the biggest financial crisis of his lifetime, hence much more is to be made if the capitalist system does not completely collapse for want of appropriate regulation of animal instincts. In that case, no doubt the great market alchemist would turn the dross of civilization’s ruination into gold.

George has lost a lot of dough too, and his fat lady has yet to sing her aria; but we do not expect him to crash and burn given his fabulous fortune, which would be impossible to personally spend, especially given his age. He is giving hundreds of millions away to propagate liberal causes; perhaps he should turn his entire fortune over to Open Society Incorporated for the salvation of the world from the depredations of the regressive neoconservative faction – perchance Open Society Incorporated could buy its own continent one day. Yes, it is true that the doom he predicted for 1998 did not come about, but he is predicting doom again; given his record, we doubt that his hunch is probably wrong. What are we cattle to do? Stampede into the Great Depression? May Open Society Incorporated save us!

We know George makes his big hauls on radical, short-term moves. Cattle are directed to invest for the long run, dollar-cost-averaging along the way; yet in the long run each and every one of us in fact doomed, so why not go for broke now? Sure, we may gradually pile up a fortune for our old age, for our kids and grandkids, and for charitable works. A certain Canadian gentleman has seats on several exchanges, seats that he keeps, he says, simply to keep up with what is going on while he looks for investment opportunities that he and his clients can salt away for their kids. He does not try to outwit the market as a whole, but looks for particular opportunities he understands. Fine, but the sharp incline of the S-curve and the anarchic irrationality of free-marketers gives us cause to believe that the apocalypse is nigh, that the last of Toynbee’s civilizations is about to bite the dust. We are doomed all the more if there is no god nor gods to appease; if there is one or more of them, we had better find better rituals.

Let Doom be damned! Liberal-minded, nonjudgmental people have little faith in the domination of Dom or in Dom’s Doom or in redemption. Still, we like the excitement of periodic bloodbaths that cleanse the channels for the compound growth of our personal investments, so let the lion eat his predecessor’s cubs and plant his own. We want to make a big crop with a little seed if not get something for nothing. Others want to make a fast buck by all means, including risking everything. After all, the average return is boring. The fixed point or soul of a stable equilibrium is death. It does not exist among the living, and its existence after death is highly unlikely despite the ancient absurdity of ultimate skepticism, to the effect that nothing exists because nothing is permanent. So let life swing from mania to panic while we study the psychology of crowds and wonder when the market will break and where the inflation will go next.

Enter George Soros to take advantage of volatility, the speculator’s best friend. Anybody can have a hunch. We should not rely on hunches without the benefit of a great deal of water under the bridge and numerous imaginative exercises in respect to what the future might bring. He reflects a great deal before having a hunch that things are reflexively overvalued or undervalued by the elite, who ride herd on the manic-depressive market until paranoia mounts, shots are randomly fired, and the crowd stampedes from delusions of grandeur to delusions of persecution. He runs with the cattle until his animal instinct informs him that the lowing herd is about to run off the wall of worry, and then he scoops up a lion’s portion of the kill.

Back spasms are reportedly the reflex that moves George to place his bets. They must be a symptom of his intuition, a subconscious judgment on his considerable experience and education if not a transcendental revelation from the money-god. Let us not underestimate the potential of the human brain mounted on the economic animal; surely a randomly walking monkey could not chalk up as many wins as George. Nor should we overestimate the workings of the marvelously complex biological brain: he may be enjoying a rather long lucky streak. Almost every extraordinarily successful person takes a bow to Lady Luck or Bon Fortuna after giving standard lip-service to the virtues of hard work and long hours. And many hard-working traders prosper because they know what they are doing, and their knowledge is sometimes a hunch in some hysterical form, such as a back spasm or itching palm. Any one of them might have been George Soros, but they did not take his place on the curve, and for good reason: their fate was not his.

George has said that he is not to blame for the downfalls, for if he had not taken his position someone else would have enjoyed the windfalls from the punctured bubbles. Now he is not the man who jumped off the Brooklyn Bridge at midnight on New Year’s Eve because only 85 had jumped before he arrived, and he wanted to obey the so-called law of averages, which stated that 86 people on the average jump off the bridge annually. No, George was pushed off the bridge, not to plummet fatally but to catch the updraft and circle far above the madding Wall Street crowd. The cause of his success is, in a word, Fate. Perchance George Soros would contest the circular argument that he is the world’s greatest speculator because he is the world’s greatest speculator, which in effect is to say that the effect is the cause, but that is his problem, not ours. That is not to say that we discount his acumen or begrudge him his fate; we celebrate both.

The Bubble People

2008-05-17T07:59:00.000-07:00

We might safely say that there is truth to science when its scientists know that certain causes lead to certain effects and are able to prove the relationship between definite causes and effects by way of public demonstration. A science that cannot predict events is a so-called science, not a true science at all in the modern sense of the term, and that much might be said of the social sciences having unpredictable humanity as their subject, “sciences” such as the psychological, sociological, political and economic, for such sciences are notorious for their inability to predict even great human events, much to the chagrin of their respective scientists.

On the other hand, what hard science has done for us is marvelous, but it deals with very small pieces of the great equation, and what it has accomplished on the whole may be undone in short order by natural disasters, among which we may count man-made disasters, for man is of nature and has his storms and upheavals as well. Social behavior is not merely complicated or difficult to figure out without with the help of supercomputers: it is incredibly complex; wherefore it is as impossible to predict, for example, when relative peace will be punctuated by world war as it is to predict when an gigantic earthquake will occur; yet we know for sure that wars and earthquakes are somehow bound to occur sooner or later, and that certain known and unknown factors, social and natural, are to blame, therefore our investigations into the myriad causes continue.

At the very least, we may collect data and calculate the probabilities while preparing for the worst and taking advantage of the best – there are booms as well as busts. Still, the calamity catches society unawares, despite the prophecies of doom attributed to the lord of wrath. Let the pessimists be self-damned; we cannot thrive and live easily with the naked threat of impending doom always in mind; therefore we put on a brave face and walk with confident pace through the valley of death; we shall all die one day anyway, so why not make the most of it in the meantime?

Our faces and worldviews constitute denials of death; ironically, our limiting perspectives may cause many of our violent disturbances; but we cannot live without them, so they are not wholly to blame. The relatively lengthy peaceful interludes between punctuations lulls the most of us into a false sense of security, and then improbable hell may break loose over a short period of time.

Just to exaggerate: the world financial system unexpectedly collapses under the weight of what were thought to be sound investments; nuclear devices are simultaneously detonated by worldview-fanatics in several major cities, and missiles with nuclear warheads are fired in blind retaliation by legitimately organized terrorists on those countries believed to harbor illegitimately organized terrorists, those who do not have a recognized state nor a proper uniform; earthquakes from Japan to California destroy twenty-three cities, killing untold millions of people, and the resulting tsunami kills hundreds of thousands more; to top things off, a meteor the size of half a football field falls on Chicago, not to mention the eruption of several volcanoes on three continents.

Only god knows when any or all of the foregoing foretold shall happen. The scientist does not know and will probably never know. The rest of us, no matter how well-educated, are left with our hunches. Life must go on, and it must be tolerable at least, so we, as it is said of Israeli youth hanging out in Tel Aviv cafes, live in a bubble.