Wyatt Mason on Celine

Spliced from a 1984 interview published in French in LaQuinzaine Littéraire, Roth's approbation reads differently in its original, unbowdlerized form:

To tell you the truth, in France, my Proust is Céline! There's a very great writer. Even if his anti- Semitism made him an abject, intolerable person. To read him, I have to suspend my Jewish conscience, but I do it, because anti-Semitism isn't at the heart of his books, even Castle to Castle. Céline is a great liberator. I feel called by his voice.

Just as Roth's "Jewish conscience" was itself silently suspended by editorial sleight of hand, a no less misleading elision of Céline's posterity has been made. Henri Godard, editor of the Pléiade edition of Céline's novels, has argued that, taken together, the eight novels possess a "dynamic unity" without which "it is not possible to get the true measure of Céline." This does not go far enough. Once one extends the reach of Godard's claim to include the anti-Semitic trilogy, the congruence of Céline's wink-wink misanthropy with his unblinking sociopathy becomes apparent. It is not that we shouldn't read Céline because he was, at a profound level, contemptible. It is rather that, to understand Céline, we must be ready to, and permitted to, read all that he wrote. Only in this way can we begin to understand what we are saying when we might think to class him as—of all things—a humorist.

Hilton Als on A Streetcar Named Desire

You might recall the moment: Stella has just had a baby. Returning home from the hospital, she sets about restoring order to her home. First things first. She commits her older sister to a mental institution. Stella, it seems, cannot live with this truth: that Stanley, her husband, has raped Blanche. Stella prefers to treat Blanche’s report as further proof of her madness. The new mother loves her sister, but she loves her life more. If she believed any aspect of what Blanche had to say, she’d have to leave Stanley, and forego those aspects of her existence that Blanche envies — and has contempt for. Without a man, though, who would Stella be? Her marriage defines her. To divorce Stanley would mean she’d probably end up as her sister’s custodian, thereby becoming another member of the pitiful, powerless female world Blanche is a member of.

But as Williams makes clear about half way through his 1947 drama, Stella would never dream of leaving Stanley. His crude, working class demeanor degrades the memory of his wife’s genteel upbringing in Mississippi. (“I pulled you down off those columns.”) As a result, Stanley makes Stella feel alive, turned on, present. And in order not to forfeit that feeling, Stella is complicit in her own brutalization, and, ultimately, her sister’s. In fact, Blanche matters less to Stella than her future as a happily conventional woman, dutifully attending to her home, and honoring her husband.

One requires a Brando-like intensity to play Blanche, but Blanchett doesn’t yet seem to possess the kind of imagination that understands degradation; she is too competitive a spirit to grovel where Blanche has groveled in order to stay alive. In fact, the moments leading up to Blanche’s rape—the cutting of the final chord of reality—rang especially false, because Blanchett plays it as though Blanche is drunk, confused, fitful, and not as a willing female victim to Stanley’s male need for control; she is ultimately relegated to the life of tragic mundanity she has tried so valiantly to escape, while Stella runs towards it.

Jeffrey Friedman on Regulation

Clearly the regulators were predicting that steering banks' leverage into highly rated MBS would be prudent. This prediction proved disastrously wrong, but the Recourse Rule heavily tilted the field toward banks that went along with the regulators' prediction. Heterogeneous behavior among competing enterprises normally spreads society's bets among the different predictions (about profit and loss) made by various capitalists. Thus, the herd mentality is a danger under capitalism, as under every other system. Yet regulation produces the equivalent of a herd mentality by force of law. The whole point of regulation is to homogenize capitalists' behavior in a direction the regulators predict will be prudent or otherwise desirable. If the regulators are wrong, the result is a system-wide failure. "Systemic risk regulation" may be a contradiction in terms.

Neither capitalists nor regulators can use crystal balls to avoid making bad bets. That highly rated mortgage-backed securities would be prudent turned out to be a very bad bet. But we all suffered because this bet was imposed by financial regulators on the whole system.

Jeff Madrick's response: What made the commercial banks dangerous was that they nimbly skirted regulations rather than abiding by them; they were able to do so by the use of their relatively new structured investment vehicles and other off-balance-sheet transactions, including trading in derivatives. A main cause of the crisis was precisely those over-the-counter derivatives, which were not regulated, and led many bankers, hedge funds, and investment banks astray by thinking they had adequately insured their investments and could take on more risk. (As an aside, going back a few years, this is why Citi group and JPMorgan Chase lent so much money to the likes of Enron and WorldCom, soon after to become the largest bankruptcies in American history.)

Rory Stewart on Afghanistan

We armed militias in 2001, disarmed them through a demobilization program in 2003, and rearmed them again in 2006 as community defense forces. We allowed local autonomy in 2001, pushed for a strong central government in 2003, and returned to decentralization in 2006. First we tolerated opium crops; then we proposed to eradicate them through aerial spraying; now we expect to live with opium production for decades.

Jonathan Raban on Sarah Palin

Her nasal voice, pitched in the upper register, with the upsy-downsy, singsong delivery of a kindergarten teacher, became, rather improbably, a great electoral asset. Her diction and accent were shaped more by class than region, and spiced with faux-genteel cuss words like "dang," "heck," "darn," "geez," "bullcrap," and "bass-ackwards." It was a voice unspoiled by overmuch formal education and boldly unafraid of truisms and clichés; a perfect foil for Obama's polished law-school eloquence. In the narrative of the McCain campaign, she was the exemplary real American, Obama the phony one, and when people are now interviewed in the interminable lines for her book signings, by far their most common remark about her is "She's real."

Alaska, the particular reality from which Palin hails, is so little known by most Americans that she was able to freely mythicize her state as the utopian last refuge of the "hard work ethic," "unpretentious living," and proud self-sufficiency. Her anti-tax rhetoric (private citizens spend their money more wisely than government does) and disdain for "federal dollars" were unembarrassed by the fact that Alaska tops the tables of both per capita federal expenditure, on which one in three jobs in the state depends, and congressional earmarks, or "pork." So, too, she mythicized the straggling eyesore of Wasilla (described by a current councilwoman there as "like a big ugly strip mall from one end to the other") as the bucolic small town of sentimental American memory. Listening to Palin talk about it, one was invited to inspect not the string of oceanic parking lots attached to Fred Meyer, Lowe's, Target, Wal-Mart, and Home Depot, or the town's reputation among state troopers as the crystal meth capital of Alaska, but, rather, the imaginary barber shop, drugstore soda fountain, antique church, and raised boardwalks, seen in the rosy light of an Indian summer evening.

Commonsense Conservatism hinges on the not-so-tacit assumption that the average, hardworking churchgoer, like the ladies at the booth, equipped with the fundamental, God-given ability to distinguish right from wrong, is in a better position to judge, on "principle," the merits of an economic policy or the deployment of American troops abroad than "the 'experts'"—a term here unfailingly placed between derisive quotation marks. Desiccated expertise, of the kind possessed by economists, environmental scientists, and overinformed reporters from the lamestream media, clouds good judgment; Palin's life, by contrast, is presented as one of passion, sincerity, and principle. Going Rogue, in other words, is a four-hundred-page paean to virtuous ignorance.

Lex on The War on Greed

Some bankers, poor darlings, feel persecuted by the baying mob. And indeed an inflated sense of entitlement is a failing common to much of the public too. In the UK, interest rate cuts since the start of the crisis have delivered the average £103,000 floating rate mortgage holder an annual saving of £4,635. Against that, the government estimates the net cost of bailing out the financial system at £10bn – or £400 per household. For many Britons, the crisis has also handed them a windfall. Just like the bankers they love to loathe, few see it that way

Buiter on the Dubai default

I don’t see what the big deal is...If you earn a risk premium during good times, you should not moan when the borrower defaults from time to time when the going gets tough.

The debt of the Dubai World Group and of Nakheel was not Dubai sovereign debt or sovereign-guaranteed debt. The only way a bail out by the Dubai sovereign of the debt holders of Dubai World and Nakheel would enhance the sovereign’s reputation would be by enhancing its reputation as a sucker.

Fortunately, property companies don’t fall into the systemically important category. Their collapse is painful for their shareholders, creditors and, if the local labour markets are weak, their employees. They are not, however, systemically important. There collapse will not threaten the delicate fabric of financial intermediation. They are fit to fail. Creditors beware.

Adam Kirsch on Engels

Many of Engels' lurid details and damning statistics come from official reports like Edwin Chadwick's "Report on the Sanitary Conditions of the Labouring Population of Great Britain", which was commissioned by a Whig government and published under a Tory one. Indeed, while Engels insists that the workers cannot hope for redress from a bourgeois-aristocratic Parliament, he can't help but note that "although the middle classes at the moment are the main - indeed the only - power in Parliament, nevertheless the last session (1844) was in effect a continuous debate on working-class conditions. All this suggests that fare from being obdurate, England's ruling class were taking action - slowly and as yet inadequately - to solve the problems caused by the industrial revolution. These problems were, it is useful to remember, totally unprecedented, not just in English but in human history. The sudden eruption of vast polluted slums in the North of England baffled both the institutions of government and the prevailing theories of economics and society.

Hilary Mantel on Keith Thomas' The Ends of Life

Warfare was an aristocratic business, and young men trained for nothing else: then along came firearms, which made any low-class fool into a killing machine.

Hilary Mantel on starsuckers

We live in a society basted in self-regard, our moralists tell us: fat and dozy on the lion's share of the world's resources, polluting the seas and burning fossil fuels, we gaze in loving torpor at our own reflection, and the gnat-bite of recession barely disturbs our narcissistic trance. More than any generation before us, we command the resources for self-realisation - a "life well lived", as Keith Thomas puts it. But do we want to be artists, philosophers, pioneers of the natural sciences? No: we want to be celebrities. We dream of instant, global fame. We expect it to enrich us, gratify us, but are less concerned that it outlast us. Once, priorities were different.

Zizek on Berlusconi

Berlusconi is a significant figure and Italy an experimental laboratory where our future is being worked out. If our political choice is between permissive-liberal technocratism and fundamentalist poplarism, Berlusconi's great achievement has been to reconcile the two.  The wager behind Berlusconi's vulgarities is that the people will identify with him as embodying the mythic image of the average Italian: I am one of you, a little bit corrupt, in trouble with the law, in trouble with my wife because I'm attracted to other women. Yet we shouldn't be fooled: behind the clownish mask there is a state power that functions with ruthless efficiency.

Zizek on Ahmadinejad

Ahmadinejad is not the hero of the Islamist poor but a corrupt Islamofascist populist, a kind of Iranian Berlusconi whose mixture of clowning posturing and ruthless power politics is causing unease even among the ayatollahs. His demagogic distribution of crumbs to the poor shouldn't deceive us: he has the backing not only of the organs of police repression and a very Westernised PR apparatus.  He is also supported by a powerful new class of Iranians who have become rich thanks to the regime's corruption - the Revolutionary Guard is not a working class militia but a mega-corporation, the most powerful centre of wealth in the country.

Wilde's Preface to Dorian Gray

The artist is the creator of beautiful things. To reveal art and conceal the artist is art's aim. The critic is he who can translate into another manner or a new material his impression of beautiful things.

The highest as the lowest form of criticism is a mode of autobiography. Those who find ugly meanings in beautiful things are corrupt without being charming. This is a fault.

Those who find beautiful meanings in beautiful things are the cultivated. For these there is hope. They are the elect to whom beautiful things mean only beauty.

There is no such thing as a moral or an immoral book. Books are well written, or badly written. That is all.

The nineteenth century dislike of realism is the rage of Caliban seeing his own face in a glass.

The nineteenth century dislike of romanticism is the rage of Caliban not seeing his own face in a glass. The moral life of man forms part of the subject-matter of the artist, but the morality of art consists in the perfect use of an imperfect medium. No artist desires to prove anything. Even things that are true can be proved. No artist has ethical sympathies. An ethical sympathy in an artist is an unpardonable mannerism of style. No artist is ever morbid. The artist can express everything. Thought and language are to the artist instruments of an art. Vice and virtue are to the artist materials for an art. From the point of view of form, the type of all the arts is the art of the musician. From the point of view of feeling, the actor's craft is the type. All art is at once surface and symbol. Those who go beneath the surface do so at their peril. Those who read the symbol do so at their peril. It is the spectator, and not life, that art really mirrors. Diversity of opinion about a work of art shows that the work is new, complex, and vital. When critics disagree, the artist is in accord with himself. We can forgive a man for making a useful thing as long as he does not admire it. The only excuse for making a useless thing is that one admires it intensely.

All art is quite useless.

Buiter slags off Summers

There are several reasons why Summers would be an inappropriate choice as chairman of the Fed. Let’s start with Fed-relevant knowledge and expertise. Summers is not a monetary economist or macroeconomist. He has never shown any serious interest in researching and understanding the workings of the kind of complex, interdependent dynamic systems that represent the environment a central bank operates in. He is the arch-typical quick and dirty partial equilibrium man, full of clever isolated micro-insights, but incapable of grasping the whole. His macroeconomics stalled at the Keynesian cross. As a monetary economist he has never seen a Federal Funds rate target so low he did not want it just a bit lower.

As regards the regulatory and supervisory functions of the Fed, Summers would be a disaster. During his time in the Clinton administration, culminating in his stint as Treasury Secretary, he was, with Greenspan, the main official apostle of full-speed ahead financial sector deregulation. The same naive trust in self-regulation and market discipline that has tarnished Greenspan’s reputation has been a trademark of Summers in action, both at home and abroad. Summers remains cognitively captured by old Wall Street and a prisoner of its culture and views.

Even before Summers went to the US Treasury, his approach to financial crises (in emerging markets and developing countries) never got beyond the putting out of immediate fires. The impact of the bail-outs and rescue efforts advocated and promoted by Summers on the likelihood and severity of future crises was either not considered or not given any weight.

The only time Summers mentions moral hazard is when he asserts that now is not the time to worry about it. And of course, it is always now. Well, now is always the time to worry about moral hazard. There is always more than one way of skinning the cat, and different ways will have different implications for moral hazard. Just one example. Bank of America and Citigroup did have an effective special resolution regime (administered by the FDIC) throughout the crisis. Why was the tax payer called on to recapitalise the banks when it was perfectly feasible to make the unsecured creditors pay instead?

Once the immediate crisis is over, the highest priority should be attached to designing and creating institutional arrangements and incentive structures that will minimize the likelihood and severity of future systemic crises. Summers has never shown any interest in creating institutions that enable policy makers (in the Fed, in the Treasury and in the regulatory agencies) to make credible, long-term commitments. He invariable favours opportunistic discretion over rule-bound flexibility. The last thing the US needs today is a chairman of the Fed with the long-term perspective and attention span of a fruit fly.

Michael Lewis on AIG-FP

"I'm convinced that our input into the system led to a substantial portion of the increase in house prices in the US. We facilitated a trillion dollars in mortgages," says one trader. "Just us." Every firm on Wall Street was making fantastic sums of money from this machine, but for the machine to keep on running, the Wall Street firms needed someone to take the risk. When Gene Park informed them that AIG-FP would no longer do so - Hello, my name is Gene Park and I'm closing down your business - he became the most hated man on Wall Street. The big Wall Street firms solved the problem by taking the risk themselves. The hundreds of billions of dollars of sub-prime losses suffered by Morgan Stanley, Merrill Lynch, Lehman Brothers, Bear Stearns, and the others were hundreds of billions of dollars of losses that might otherwise have been suffered by AIG-FP.

What no-one realised is that Joe Cassano, in exchange for the privilege of selling credit default swaps to Goldman Sachs, Merrill Lynch and all the rest, had agreed to a change in the traditional terms of trading between AIG and Wall Street. In the beginning AIG had required its counter-parties simply to accept its AAA credit: it refused to post collateral. But in the case of the sub-prime mortgage credit default swaps, Cassano had agreed to several triggers, including AIG losing its AAA rating, that would require the firm to post collateral. The subsequent race by the big Wall Street banks to obtain billions in collateral from AIG was an upmarket version of a run on a bank. AIG couldn't afford to pay off Goldman Sachs in MArch 2008. But that was okay. The US Treasury, led by the former head of Goldman Sachs, Hank Paulson, agreed to make good on AIG's gambling debts. One hundred cents on the dollar.

Martin Wolf on Mervyn King versus the Government

"One of the results of this crisis is to imperil central bank independence, not just in the UK. This is so for three reasons: at close to zero official interest rates, the boundary between monetary and fiscal policy erodes; governments are running huge fiscal deficits, particularly in the UK and the US, which threaten monetary stability; and, finally, those in charge wish to divert blame for the disaster.

"Mr King has made four points, all critical of the government: first, contrary to the views of the Treasury, “if banks are thought too big to fail, then . . . they are too big”; second, the Bank of England has “a new statutory authority for financial stability ... [But] it is not entirely clear how the Bank will be able to discharge its new statutory responsibility if we can do no more than issue sermons or organise burials”; third, he has not been consulted on the forthcoming financial services white paper; and, last, as he told the Commons Treasury committee: “If the economy were to recover along the path assumed in the Budget projections of GDP then I think the time over which deficits need to be reduced is likely to have to be faster than was implied by [the Budget] projection.”

"Let us start with a simple question: is the governor correct on the substance? The answers are: yes, yes, yes and yes.

"True, the politicisation of the independent central bank is potentially very dangerous. The Bank’s still-limited independence may be compromised or even overturned. Moreover, at a time when co-operation among the authorities is essential, the appearance of disarray is itself damaging to confidence. Yet, against these powerful considerations, a responsible public official has to decide whether a particular issue has become so important that bringing his views into the open has become the only patriotic thing to do.

Guido Fawkes on Gordon Brown

After Labour was voted into fourth place in the European elections, a flock of ministers resigned, and 5 MPs called for him to resign at the PLP earlier this week....

Gordon has had a damascene conversion to democratic renewal since little over 5% of eligible voters supported him at the polls last week. The irony of a PM who avoided facing election to be leader of his own party and has no democratic public mandate wanting “democratic renewal” is striking. If he really wishes to reconnect with voters he could always call a general election.

1980s redux, part two

The trading gap shuffle, the trading gap shuffle,
We're in a heap of trouble,
Doin' the trading gap shuffle, yes sir!

1980s redux

The deficit rag, oh yeah, the deficit rag,
Those budget gaps can be a twelve-digit drag.
I'm telling, that's the deficit,
They really made a mess of it,
That's the deficit rag.

On a High Inflation Future

Just got back from Barcelona where Willem Buiter gave a characteristically insightful and witty presentation on the outlook for the US (relatively quick bounce-back) and the Eurozone (much longer recovery, maybe into 2011.) The one killer point was about social cohesion around the task of rebuilding the public balance sheet. Previously, whenever public debt has exceeded 100% GDP the cause has been an expensive war. The public, Buiter suggests, is willing to suffer fiscal austerity on the back of a unifying national shock. But the public will prove to be less willing to pay higher taxes and/or suffer public spending cuts to pay down the debt incurred, according to the caricature, by greedy bankers earning phat fees by speculating wildly. The result will be high electoral resistance to necessary fiscal prudence.

Worse still, Buiter suggests that politicians will not have the necessary gumption to impose fiscal restraint. In the US, "the Republicans will not impose higher taxes and the Democrats will not impose spending cuts." As to whether the Fed will, Volcker-style, do the job for them, Buiter is sceptical. The government will simply "install Larry Summers at the Fed". The result will be monetisation of the Federal debt, and inflation in the high single digits or low double digits.

I see no reason why the same argument wouldn't apply in the UK. The only difference is that Sterling is not a safe haven, reserve currency. Whether the combined threat from the bond market and the ratings agencies will be enough to scare UK politicians remains to be seen. And of course, it's much harder to co-opt the Bank of England, but not impossible.

So it's seems we're lining up for 1970s style stagflation. Below trend growth: above target inflation. And once again, Germany (and her post Euro hinterland) will be the only exception as the Buba-isation of the ECB continues....

On the Chinese buying Hummer

An historic moment, as the manufacture of an iconic US vehicle shifts to the Communist Super-power. How are the mighty fallen.

O tempore

This written in 2002...."Japan's banks are undeniably in worse shape than Germany's: some of their balance sheets are propped up by little more than regulatory indulgence."

John Lanchester on the UK Bank Bail-Out

Put simply, this is an insurance scheme. The government is insuring the banks against losses on their assets. There’s nothing unusual about such schemes: they’re a standard feature of the banking world. In fact, they are one of the sources of the current crisis. In the commercial world, a deal in which one financial institution insures another against defaults, in return for a fee, is called a credit default swap, or CDS. In effect, the UK government has undertaken a CDS with our imploded banks.

John Lanchester on the rise and fall of RBS

During the 17th century, Scottish investors had noticed with envy the gigantic profits being made in trade with Asia and Africa by the English charter companies, especially the East India Company. They decided that they wanted a piece of the action and in 1694 set up the Company of Scotland, which in 1695 was granted a monopoly of Scottish trade with Africa, Asia and the Americas. The Company then bet its shirt on a new colony in Darien – that’s Panama to us – and lost.[1] The resulting crash is estimated to have wiped out a quarter of the liquid assets in the country, and was a powerful force in impelling Scotland towards the 1707 Act of Union with its larger and better capitalised neighbour to the south. The Act of Union offered compensation to shareholders who had been cleaned out by the collapse of the Company; a body called the Equivalent Society was set up to look after their interests. It was the Equivalent Society, renamed the Equivalent Company, which a couple of decades later decided to move into banking, and was incorporated as the Royal Bank of Scotland. In other words, RBS had its origins in a failed speculation, a bail-out, and a financial crash so big it helped destroy Scotland’s status as a separate nation.

Warren Buffett on airlines

The interesting thing of course is that if you go back in time….from Kitty Hawk, net, the airline transport business has made no money. Just think if you’d been there at Kitty Hawk and you’d seen this guy go up and all of a sudden a vision hits you that tens of millions of people would be doing this all over the world some day. It would bring us all closer together and everything. You’d think, my God, this is something to be in on. Despite putting in billions of dollars, the net return to owners for the entire airline industry, if you’d owned it all, and you’d put in all the money, is less than zero. If there had been a capitalist down there, the guy should have shot down Wilbur. One small step for mankind and one huge step back for capitalism.

NYRB on John le Carre

If you feel that good novels are the lie that reveals the truth, then it will always be thrilling, in any given period, to come across works that manage to be much more revealing than the evening news. John le Carré made that kind of thrill into a genre, capturing the dowdy, fatal, realistic weather of European espionage at a time when the subject was covered on the BBC as if it were merely a parlor game beloved of donnish existentialists.

Even today, with his most groundbreaking novels behind him, le Carré continues to be the world's most reliable witness to the vicissitudes of international paranoia: his books conceive of a Western world that has a costly obsession with its possible enemies; he shows you this world's secret missions, its botched jobs, its manifold attempts to thwart the corrupting and sometimes terrifying idealism of others, while keeping the reader close to the exact lineaments of the way we live now.

Buiter on the potentially parlous state of European FX reserves

Recently, interest in the Bank of England’s US dollar repos has petered out, but at the beginning of the programme, amounts close to the $40 bn limit were taken up. If those US dollars were borrowed by banks like RBS and HBOS, both insolvent except for past, current and anticipated future government financial support, they may well have been lost. These banks (and other UK banks that are still standing more or less on their own two feet) had (and continue to have) very large US dollar exposures on which they made massive losses - well in excess of $40 bn. These banks also have few liquid foreign currency assets.

Assume one or more banks that borrowed US dollars from the Bank of England cannot pay them back. The Bank of England takes the collateral that secured these US dollar loans. Eligible collateral for these loans consists of those securities that are routinely eligible in the Bank’s short-term repo open market operations and Standing Facilities, as published on the Bank’s website, together with conventional US Treasury securities. Assume that little if any of the collateral offered for the US dollar loans from the Bank of England consisted of US Treasury securities. So the Bank gets a mitt full of sterling securities back in lieu of the US dollars it has lost. Nice, but not good enough. When the swap arrangements expires, the Bank of England has to repay the Fed in US dollars, not in sterling securities. So unless the swap arrangement is extended, or extended and expanded, the Bank of England would have to send the Fed an ‘Oops’ note.

If the full swap line was lost ($40 bn), the UK would be completely out of (net) foreign exchange reserves - if we consolidate the foreign exchange assets and liabilities of the government and the US dollar swap exposure of the Bank of England. Not a good place to be. Of course, the beauty of swaps if that they are off-balance sheet items.

I haven’t checked the details about the official foreign exchange reserves of Switzerland and the Euro Area nations, nor do I know much about the foreign exchange losses of Swiss and Eurozone banks, although I expect that these losses are vast. It is possible that the earlier use of the swap lines by the ECB and the SNB has also made a rather large dent in the net foreign exchange reserves of Switzerland and the Eurozone nations.

In any case, the Machiavallian interpretation of the redundant second announcement of the central bank swaps is that it was intended to divert attention from the dire condition of the official foreign exchange reserves of a number of European countries, especially the UK. Extending the duration of the swaps delays the moment that the loss of the US dollars will have to be recognised. If this was indeed the case, it is bound to fail. Markets can be stupid, but not that stupid. This will not reduce the risk that Reijkjavik-on-Thames will have to seek IMF assistance at some point.

J K Galbraith on margin rates

A great river of gold began to converge on Wall Street, all of it to help Americans to hold common stock on margin. Corporations also found these rates attractive. At twelve percent Wall Street might even provide a more profitable use for the working capital of a company than additional production A few firms made this decision. Many companies started lending their surplus funds on Wall Street. By early 1929, loans form these non-banking sources were approximately equal to those from banks. Later they became much greater. 

There were still better ways of making money. In principle, New York banks could borrow money from the Federal Reserve Bank at five per cent and re-lend it in the call market for twelve. In practice they did. This was, possibly, the most profitable arbitrage operation of all time. Only a drastic increase in the Fed's rediscount rate would have made it unprofitable. In fact, higher interest rates would have been distressing to everyone but the speculator.

J K Galbraith on investment trusts

The most notable piece of speculative architecture of the late twenties, and the one by which, more than any other device, the public demand for common stock was satisfied, was the investment trust or company. The investment trust did not promote new enterprises or enlarge old ones. Even in the United States in the twenties, there were limits to the amount of real capital which existing enterprises could use or new ones could be created to employ. The virtue of the investment trust was that it brought about an almost complete divorce of the volume of corporate securities outstanding from the volume of corporate assets in existence. The former could be twice, thrice or any multiple of the latter. The volume of underwriting business ad of securities available for trading on the exchanges all expanded accordingly.

J K Galbraith on margins

In the stock market, the buyer of securities on margin gets full title to his property in an unconditional sale. But he rids himself of the most grievous burden of ownership - that of putting up the purchase price - by leaving his securities with his broker as collateral for the loan that paid for them. The buyer gets the full benefit of any increase in value - the price of the securities goes up - but the loan that bought them does not. 

The machinery by which Wall Street separates the opportunity to speculate from the unwanted returns and burdens of ownership is ingenious, precise and almost beautiful. Banks supply funds to the brokers, brokers to customers, and the collateral goes back to the banks in a smooth and all but automatic flow. Margins - the cash which the speculator must supply in addition to the securities to protect the loan and which he must augment if the value of the collateral securities should fall and so lower the protection they provide - are effortlessly calculated and watched.

Wall Street, however, has never been able to express its pride in these arrangements. They are admirable and wonderful only in relation to the purpose they serve. That purpose is to accommodate the speculator and facilitate speculation. But the purposes cannot be admitted. If Wall Street confessed this purpose, many thousands of moral men and women would have no choice but to condemn it for nurturing an evil thing and call for reform. Margin trading must be defended not on the grounds that it efficiently and ingeniously assists the speculator but that it encourages the extra trading which changes a thin anemic market into a thick and healthy one. At best this is a dull by-product and a dubious one. Wall Street, in these matters, is like a lovely and accomplished woman who must wear black cotton stockings, heavy woollen underwear and parade her knowledge as a cook because, unhappily, her supreme accomplishment is as a harlot.

Buiter on the possibility of sovereign default

Pointing to a non-negligible risk of sovereign default in the US and the UK does not, I fear, qualify me as a madman. The last time things got serious, during the Great Depression of the 1930s, both the US and the UK defaulted de facto, and possibly even de jure, on their sovereign debt.

In the case of the US, the sovereign default took the form of the abrogation of the gold clause when the US went off the gold standard (except for foreign exchange) in 1933. In 1933, Congress passed a joint resolution canceling all gold clauses in public and private contracts (including existing contracts). The Gold Reserve Act of 1934 abrogated the gold clause in government and private contracts and changed the value of the dollar in gold from $20.67 to $35 per ounce. These actions were upheld (by a 5 to 4 majority) by the Supreme Court in 1935.

In the case of the UK, the de facto sovereign default took the form of the conversion in 1932 of Britain’s 5% War Loan Bonds (callable 1929-1947) into new 3½ % bonds (callable from 1952) on terms that were unambiguously unfavourable to the bond holders. Out of a total of £2,086,000,000 outstanding, £1,500,000,000, or something over 70%, was converted voluntarily by the end of 1932, thanks both to the government’s ability to appeal to patriotism and joint burden sharing in the face of economic adversity and to ferocious arm-twisting and ‘moral suasion’.

I believe both defaults were eminently justified. There is no case for letting the interests of the holders of sovereign debt override the interests of the rest of the community, regardless of the financial, economic, social and political costs involved. But to say that these were justifiable sovereign defaults does not mean that they were not sovereign defaults. Similar circumstances could arise again.

Ross McKibbin on the last days of Labour

To do something requires a proper understanding of what went wrong. Here, much of the media commentary has missed the point. It has been all too easy to blame the bankers; their behaviour makes it almost compulsory. It is also easy to blame the clever Oxbridge types who invented risk models and forms of securitisation neither they nor anyone else understood. But their role was always secondary. If you tell bankers to go ahead and make money that is what bankers will do. If the Labour Party says it is intensely relaxed about people getting filthy rich, people will get filthy rich, and if you announce that you will regulate their activities with a light touch they won’t care how they get rich. Adair Turner, in his defence of the Financial Services Authority, was perfectly right to say that had the FSA told any bank to give up its riskier practices the government would have been down on it like a ton of bricks. This says little for the FSA’s independence or its courage but, alas, it’s true.

Under New Labour departments of state are named not after their function but after their aspirations – the names, it seems, are designed to tell you what the government aspires to. Part of the department that was once ‘education’ is now ‘innovation, universities and skills’, in case we failed to understand that the government wishes to encourage skills and innovation. The department that used to be concerned with ‘trade and industry’ is now concerned with ‘business, enterprise and regulatory reform’, ‘regulatory reform’ meaning simply ‘removal of regulations’. The very name was both a signal to the City that the government wanted it to make a great deal of money, and an expression of the ideology that has prevailed in most English-speaking countries since the early 1980s: an ideology deeply hostile to the quasi-social democracy of the 1960s and 1970s, and one which regarded wide and increasing income inequality as essential to economic success. 

Knowing what to do now depends on the kind of economy and society we wish to re-create. That is the hard part and there is no evidence that Brown has given any real thought to it. All he seems to want is the status quo ante plus an FSA with more gumption. 

Slavoj Žižek on Obama, 9-11 and the Financial Crisis

Noam Chomsky called for people to vote for Obama ‘without illusions’. I fully share Chomsky’s doubts about the real consequences of Obama’s victory: from a pragmatic perspective, it is quite possible that Obama will make only some minor improvements, turning out to be ‘Bush with a human face’. He will pursue the same basic policies in a more attractive way and thus effectively strengthen the US hegemony, damaged by the catastrophe of the Bush years.

Obama’s victory is a sign of history in the triple Kantian sense of signum rememorativum, demonstrativum, prognosticum. 

The reason Obama’s victory generated such enthusiasm is not only that, against all odds, it really happened: it demonstrated the possibility of such a thing happening. 

President Bush’s addresses to the American people after 9/11 and the financial meltdown sound like two versions of the same speech. Both times, he evoked the threat to the American way of life and the need for fast and decisive action. Both times, he called for the partial suspension of American values (guarantees to individual freedom, market capitalism) to save those very values. Where does this similarity come from?

The fall of the Berlin Wall on 9 November 1989 marked the beginning of the ‘happy 1990s’. According to Francis Fukuyama, liberal democracy had, in principle, won. The era is generally seen as having come to an end on 9/11. However, it seems that the utopia had to die twice: the collapse of the liberal-democratic political utopia on 9/11 did not affect the economic utopia of global market capitalism, which has now come to an end.

The financial meltdown has made it impossible to ignore the blatant irrationality of global capitalism.....Saving endangered species, saving the planet from global warming, finding a cure for Aids, saving the starving children . . . All that can wait a bit, but ‘Save the banks!’ is an unconditional imperative which demands and gets immediate action. 

When the normal run of things is traumatically interrupted, the field is open for a ‘discursive’ ideological competition...To put it in old-fashioned Marxist terms, the main task of the ruling ideology in the present crisis is to impose a narrative that will not put the blame for the meltdown on the global capitalist system as such, but on its deviations – lax regulation, the corruption of big financial institutions etc.

Satie to Debussy

Monsieur Erik Satie is working at the present time on a delightful work entitled 2 Morceaux en forme de poire. Monsieur Erik Satie is crazy about this new invention of his mind. He talks about it a lot and says very good things about it. He believes it superior to everything he has written up till now; perhaps he's wrong, but we mustn't tell him so: he wouldn't believe it.

Amartya Sen on Capitalism

What are the special characteristics that make a system indubitably capitalist—old or new? If the present capitalist economic system is to be reformed, what would make the end result a new capitalism, rather than something else? It seems to be generally assumed that relying on markets for economic transactions is a necessary condition for an economy to be identified as capitalist. In a similar way, dependence on the profit motive and on individual rewards based on private ownership are seen as archetypal features of capitalism. However, if these are necessary requirements, are the economic systems we currently have, for example, in Europe and America, genuinely capitalist?

All affluent countries in the world—those in Europe, as well as the US, Canada, Japan, Singapore, South Korea, Australia, and others—have, for quite some time now, depended partly on transactions and other payments that occur largely outside markets. These include unemployment benefits, public pensions, other features of social security, and the provision of education, health care, and a variety of other services distributed through nonmarket arrangements. The economic entitlements connected with such services are not based on private ownership and property rights.

Also, the market economy has depended for its own working not only on maximizing profits but also on many other activities, such as maintaining public security and supplying public services—some of which have taken people well beyond an economy driven only by profit. The creditable performance of the so-called capitalist system, when things moved forward, drew on a combination of institutions—publicly funded education, medical care, and mass transportation are just a few of many—that went much beyond relying only on a profit-maximizing market economy and on personal entitlements confined to private ownership.

Underlying this issue is a more basic question: whether capitalism is a term that is of particular use today. The idea of capitalism did in fact have an important role historically, but by now that usefulness may well be fairly exhausted.

For example, the pioneering works of Adam Smith in the eighteenth century showed the usefulness and dynamism of the market economy, and why—and particularly how—that dynamism worked. Smith's investigation provided an illuminating diagnosis of the workings of the market just when that dynamism was powerfully emerging. The contribution that The Wealth of Nations, published in 1776, made to the understanding of what came to be called capitalism was monumental. Smith showed how the freeing of trade can very often be extremely helpful in generating economic prosperity through specialization in production and division of labor and in making good use of economies of large scale.

Those lessons remain deeply relevant even today (it is interesting that the impressive and highly sophisticated analytical work on international trade for which Paul Krugman received the latest Nobel award in economics was closely linked to Smith's far-reaching insights of more than 230 years ago). The economic analyses that followed those early expositions of markets and the use of capital in the eighteenth century have succeeded in solidly establishing the market system in the corpus of mainstream economics.

However, even as the positive contributions of capitalism through market processes were being clarified and explicated, its negative sides were also becoming clear—often to the very same analysts. While a number of socialist critics, most notably Karl Marx, influentially made a case for censuring and ultimately supplanting capitalism, the huge limitations of relying entirely on the market economy and the profit motive were also clear enough even to Adam Smith. Indeed, early advocates of the use of markets, including Smith, did not take the pure market mechanism to be a freestanding performer of excellence, nor did they take the profit motive to be all that is needed.

Even though people seek trade because of self-interest (nothing more than self-interest is needed, as Smith famously put it, in explaining why bakers, brewers, butchers, and consumers seek trade), nevertheless an economy can operate effectively only on the basis of trust among different parties. When business activities, including those of banks and other financial institutions, generate the confidence that they can and will do the things they pledge, then relations among lenders and borrowers can go smoothly in a mutually supportive way. As Adam Smith wrote:

When the people of any particular country have such confidence in the fortune, probity, and prudence of a particular banker, as to believe that he is always ready to pay upon demand such of his promissory notes as are likely to be at any time presented to him; those notes come to have the same currency as gold and silver money, from the confidence that such money can at any time be had for them.  Smith explained why sometimes this did not happen, and he would not have found anything particularly puzzling, I would suggest, in the difficulties faced today by businesses and banks thanks to the widespread fear and mistrust that is keeping credit markets frozen and preventing a coordinated expansion of credit.

It is also worth mentioning in this context, especially since the "welfare state" emerged long after Smith's own time, that in his various writings, his overwhelming concern—and worry—about the fate of the poor and the disadvantaged are strikingly prominent. The most immediate failure of the market mechanism lies in the things that the market leaves undone. Smith's economic analysis went well beyond leaving everything to the invisible hand of the market mechanism. He was not only a defender of the role of the state in providing public services, such as education, and in poverty relief (along with demanding greater freedom for the indigents who received support than the Poor Laws of his day provided), he was also deeply concerned about the inequality and poverty that might survive in an otherwise successful market economy.

Lack of clarity about the distinction between the necessity and sufficiency of the market has been responsible for some misunderstandings of Smith's assessment of the market mechanism by many who would claim to be his followers. For example, Smith's defense of the food market and his criticism of restrictions by the state on the private trade in food grains have often been interpreted as arguing that any state interference would necessarily make hunger and starvation worse.

But Smith's defense of private trade only took the form of disputing the belief that stopping trade in food would reduce the burden of hunger. That does not deny in any way the need for state action to supplement the operations of the market by creating jobs and incomes (e.g., through work programs). If unemployment were to increase sharply thanks to bad economic circumstances or bad public policy, the market would not, on its own, recreate the incomes of those who have lost their jobs. The new unemployed, Smith wrote, "would either starve, or be driven to seek a subsistence either by begging, or by the perpetration perhaps of the greatest enormities," and "want, famine, and mortality would immediately prevail...." Smith rejects interventions that exclude the market—but not interventions that include the market while aiming to do those important things that the market may leave undone.

Smith never used the term "capitalism" (at least so far as I have been able to trace), but it would also be hard to carve out from his works any theory arguing for the sufficiency of market forces, or of the need to accept the dominance of capital. He talked about the importance of these broader values that go beyond profits in The Wealth of Nations, but it is in his first book, The Theory of Moral Sentiments, which was published exactly a quarter of a millennium ago in 1759, that he extensively investigated the strong need for actions based on values that go well beyond profit seeking. While he wrote that "prudence" was "of all the virtues that which is most useful to the individual," Adam Smith went on to argue that "humanity, justice, generosity, and public spirit, are the qualities most useful to others."

Smith viewed markets and capital as doing good work within their own sphere, but first, they required support from other institutions—including public services such as schools—and values other than pure profit seeking, and second, they needed restraint and correction by still other institutions—e.g., well-devised financial regulations and state assistance to the poor—for preventing instability, inequity, and injustice. If we were to look for a new approach to the organization of economic activity that included a pragmatic choice of a variety of public services and well-considered regulations, we would be following rather than departing from the agenda of reform that Smith outlined as he both defended and criticized capitalism.

3.

Historically, capitalism did not emerge until new systems of law and economic practice protected property rights and made an economy based on ownership workable. Commercial exchange could not effectively take place until business morality made contractual behavior sustainable and inexpensive—not requiring constant suing of defaulting contractors, for example. Investment in productive businesses could not flourish until the higher rewards from corruption had been moderated. Profit-oriented capitalism has always drawn on support from other institutional values.

The moral and legal obligations and responsibilities associated with transactions have in recent years become much harder to trace, thanks to the rapid development of secondary markets involving derivatives and other financial instruments. A subprime lender who misleads a borrower into taking unwise risks can now pass off the financial assets to third parties—who are remote from the original transaction. Accountability has been badly undermined, and the need for supervision and regulation has become much stronger.

And yet the supervisory role of government in the United States in particular has been, over the same period, sharply curtailed, fed by an increasing belief in the self-regulatory nature of the market economy. Precisely as the need for state surveillance grew, the needed supervision shrank. There was, as a result, a disaster waiting to happen, which did eventually happen last year, and this has certainly contributed a great deal to the financial crisis that is plaguing the world today. The insufficient regulation of financial activities has implications not only for illegitimate practices, but also for a tendency toward overspeculation that, as Adam Smith argued, tends to grip many human beings in their breathless search for profits.

Smith called the promoters of excessive risk in search of profits "prodigals and projectors"—which is quite a good description of issuers of subprime mortgages over the past few years. Discussing laws against usury, for example, Smith wanted state regulation to protect citizens from the "prodigals and projectors" who promoted unsound loans:

A great part of the capital of the country would thus be kept out of the hands which were most likely to make a profitable and advantageous use of it, and thrown into those which were most likely to waste and destroy it.  The implicit faith in the ability of the market economy to correct itself, which is largely responsible for the removal of established regulations in the United States, tended to ignore the activities of prodigals and projectors in a way that would have shocked Adam Smith.

The present economic crisis is partly generated by a huge overestimation of the wisdom of market processes, and the crisis is now being exacerbated by anxiety and lack of trust in the financial market and in businesses in general—responses that have been evident in the market reactions to the sequence of stimulus plans, including the $787 billion plan signed into law in February by the new Obama administration. As it happens, these problems were already identified in the eighteenth century by Smith, even though they have been neglected by those who have been in authority in recent years, especially in the United States, and who have been busy citing Adam Smith in support of the unfettered market.

4.

While Adam Smith has recently been much quoted, even if not much read, there has been a huge revival, even more recently, of John Maynard Keynes. Certainly, the cumulative downturn that we are observing right now, which is edging us closer to a depression, has clear Keynesian features; the reduced incomes of one group of persons has led to reduced purchases by them, in turn causing a further reduction in the income of others.

However, Keynes can be our savior only to a very partial extent, and there is a need to look beyond him in understanding the present crisis. One economist whose current relevance has been far less recognized is Keynes's rival Arthur Cecil Pigou, who, like Keynes, was also in Cambridge, indeed also in Kings College, in Keynes's time. Pigou was much more concerned than Keynes with economic psychology and the ways it could influence business cycles and sharpen and harden an economic recession that could take us toward a depression (as indeed we are seeing now). Pigou attributed economic fluctuations partly to "psychological causes" consisting of

variations in the tone of mind of persons whose action controls industry, emerging in errors of undue optimism or undue pessimism in their business forecasts.  

It is hard to ignore the fact that today, in addition to the Keynesian effects of mutually reinforced decline, we are strongly in the presence of "errors of...undue pessimism." Pigou focused particularly on the need to unfreeze the credit market when the economy is in the grip of excessive pessimism:

Hence, other things being equal, the actual occurrence of business failures will be more or less widespread, according [to whether] bankers' loans, in the face of crisis of demands, are less or more readily obtainable. Despite huge injections of fresh liquidity into the American and European economies, largely from the government, the banks and financial institutions have until now remained unwilling to unfreeze the credit market. Other businesses also continue to fail, partly in response to already diminished demand (the Keynesian "multiplier" process), but also in response to fear of even less demand in the future, in a climate of general gloom (the Pigovian process of infectious pessimism).

One of the problems that the Obama administration has to deal with is that the real crisis, arising from financial mismanagement and other transgressions, has become many times magnified by a psychological collapse. The measures that are being discussed right now in Washington and elsewhere to regenerate the credit market include bailouts—with firm requirements that subsidized financial institutions actually lend—government purchase of toxic assets, insurance against failure to repay loans, and bank nationalization. (The last proposal scares many conservatives just as private control of the public money given to the banks worries people concerned about accountability.) As the weak response of the market to the administration's measures so far suggests, each of these policies would have to be assessed partly for their impact on the psychology of businesses and consumers, particularly in America.

5.

The contrast between Pigou and Keynes is relevant for another reason as well. While Keynes was very involved with the question of how to increase aggregate income, he was relatively less engaged in analyzing problems of unequal distribution of wealth and of social welfare. In contrast, Pigou not only wrote the classic study of welfare economics, but he also pioneered the measurement of economic inequality as a major indicator for economic assessment and policy. Since the suffering of the most deprived people in each economy—and in the world—demands the most urgent attention, the role of supportive cooperation between business and government cannot stop only with mutually coordinated expansion of an economy. There is a critical need for paying special attention to the underdogs of society in planning a response to the current crisis, and in going beyond measures to produce general economic expansion. Families threatened with unemployment, with lack of medical care, and with social as well as economic deprivation have been hit particularly hard. The limitations of Keynesian economics to address their problems demand much greater recognition.

A third way in which Keynes needs to be supplemented concerns his relative neglect of social services—indeed even Otto von Bismarck had more to say on this subject than Keynes. That the market economy can be particularly bad in delivering public goods (such as education and health care) has been discussed by some of the leading economists of our time, including Paul Samuelson and Kenneth Arrow. (Pigou too contributed to this subject with his emphasis on the "external effects" of market transactions, where the gains and losses are not confined only to the direct buyers or sellers.) This is, of course, a long-term issue, but it is worth noting in addition that the bite of a downturn can be much fiercer when health care in particular is not guaranteed for all.

For example, in the absence of a national health service, every lost job can produce a larger exclusion from essential health care, because of loss of income or loss of employment-related private health insurance. The US has a 7.6 percent rate of unemployment now, which is beginning to cause huge deprivation. It is worth asking how the European countries, including France, Italy, and Spain, that lived with much higher levels of unemployment for decades, managed to avoid a total collapse of their quality of life. The answer is partly the way the European welfare state operates, with much stronger unemployment insurance than in America and, even more importantly, with basic medical services provided to all by the state.

The failure of the market mechanism to provide health care for all has been flagrant, most noticeably in the United States, but also in the sharp halt in the progress of health and longevity in China following its abolition of universal health coverage in 1979. Before the economic reforms of that year, every Chinese citizen had guaranteed health care provided by the state or the cooperatives, even if at a rather basic level. When China removed its counterproductive system of agricultural collectives and communes and industrial units managed by bureaucracies, it thereby made the rate of growth of gross domestic product go up faster than anywhere else in the world. But at the same time, led by its new faith in the market economy, China also abolished the system of universal health care; and, after the reforms of 1979, health insurance had to be bought by individuals (except in some relatively rare cases in which the state or some big firms provide them to their employees and dependents). With this change, China's rapid progress in longevity sharply slowed down.

This was problem enough when China's aggregate income was growing extremely fast, but it is bound to become a much bigger problem when the Chinese economy decelerates sharply, as it is currently doing. The Chinese government is now trying hard to gradually reintroduce health insurance for all, and the US government under Obama is also committed to making health coverage universal. In both China and the US, the rectifications have far to go, but they should be central elements in tackling the economic crisis, as well as in achieving long-term transformation of the two societies.

6.

The revival of Keynes has much to contribute both to economic analysis and to policy, but the net has to be cast much wider. Even though Keynes is often seen as a kind of a "rebel" figure in contemporary economics, the fact is that he came close to being the guru of a new capitalism, who focused on trying to stabilize the fluctuations of the market economy (and then again with relatively little attention to the psychological causes of business fluctuations). Even though Smith and Pigou have the reputation of being rather conservative economists, many of the deep insights about the importance of nonmarket institutions and nonprofit values came from them, rather than from Keynes and his followers.

A crisis not only presents an immediate challenge that has to be faced. It also provides an opportunity to address long-term problems when people are willing to reconsider established conventions. This is why the present crisis also makes it important to face the neglected long-term issues like conservation of the environment and national health care, as well as the need for public transport, which has been very badly neglected in the last few decades and is also so far sidelined—as I write this article—even in the initial policies announced by the Obama administration. Economic affordability is, of course, an issue, but as the example of the Indian state of Kerala shows, it is possible to have state-guaranteed health care for all at relatively little cost. Since the Chinese dropped universal health insurance in 1979, Kerala—which continues to have it—has very substantially overtaken China in average life expectancy and in indicators such as infant mortality, despite having a much lower level of per capita income. So there are opportunities for poor countries as well.

But the largest challenges face the United States, which already has the highest level of per capita expenditure on health among all countries in the world, but still has a relatively low achievement in health and has more than forty million people with no guarantee of health care. Part of the problem here is one of public attitude and understanding. Hugely distorted perceptions of how a national health service works need to be corrected through public discussion. For example, it is common to assume that no one has a choice of doctors in a European national health service, which is not at all the case.

There is, however, also a need for better understanding of the options that exist. In US discussions of health reform, there has been an overconcentration on the Canadian system—a system of public health care that makes it very hard to have private medical care—whereas in Western Europe the national health services provide care for all but also allow, in addition to state coverage, private practice and private health insurance, for those who have the money and want to spend it this way. It is not clear just why the rich who can freely spend money on yachts and other luxury goods should not be allowed to spend it on MRIs or CT scans instead. If we take our cue from Adam Smith's arguments for a diversity of institutions, and for accommodating a variety of motivations, there are practical measures we can take that would make a huge difference to the world in which we live.

The present economic crises do not, I would argue, call for a "new capitalism," but they do demand a new understanding of older ideas, such as those of Smith and, nearer our time, of Pigou, many of which have been sadly neglected. What is also needed is a clearheaded perception of how different institutions actually work, and of how a variety of organizations—from the market to the institutions of the state—can go beyond short-term solutions and contribute to producing a more decent economic world.

Mark Greiff on Mad Men

It’s a commonplace that portrayal of the past can be used to criticise the present. What of those cases in which criticism of the past is used to congratulate the present? I suppose it does at least expose what’s most pompous and self-regarding in our own time: namely, an unearned pride in our supposed superiority when it comes to health and restraint, the condition of women, and the toleration of (some) difference in ethnicity and sexuality. Mad Men flatters us where we deserve to be scourged. As I see it, the whole spectacle has the bad faith of, say, an 18th-century American slaveholding society happily ridiculing a 17th-century Puritan society – ‘Look, they used to burn their witches!’ – while secretly envying the ease of a time when you could still tie uppity women to the stake. If we’ve managed to become less credulous about advertising, to make it more normal and the bearer of more reasonable expectations, perhaps in 50 years’ time viewers will look back on the silly self-congratulatory subtexts of Mad Men, shake their heads, and be grateful that gender and sexual tolerance have likewise been normalised.

William Caxton (1484)

Great thanks, laud and honour ought to be given unto the clerks, poets and historiographs that have written many noble books of wisedom of the lives, passions, and miracles of holy saints, of histories of noble and famous acts and faites, and of the chronicles since the beginning of the creation of the world unto this present time, by which we be daily informed and have knowledge of many things of whom we should not have known if they had not left to us their monuments written.

Chaplin of Fairbanks and Pickford...

"If you will read the story of Peter Pan and Wendy, you will know a great deal more about Mary and Doug than you do know."

Zadie Smith on Speaking in Tongues

"Voice adaptation is still the original British sin....We feel that our voices are who we are and that to have more than one, or to use different voices for different occasions, represents at best a Janus-faced duplicity and at a worst the loss of our very souls.

"Obama can do young Jewish male, old lady from the South Side, white woman from Kansas, Kenyan elders, white Harvard nerds, black Columbia nerds, activist women, churchmen, security guards, bank tellers....Obama had the audacity to suggest that even if you can't see it stamped on their faces most people...have complicated back stories, messy histories, multiple narratives. 

"The single-voiced Obamanation crowd. They have a great fear of what they see as Obama's doubling ways. These are fears that have their roots in an anxiety about voice. When he talks to us he sure sounds like us - but behind our backs we're still clinging to our religion and our guns. Right up to the wire, Obama made many black men and women of Jackson's generation suspicious. How can the man who passes between culturally black and white voices with such flexibility, with such ease, be an honest man?

"For reasons that are obscure to me, those qualities we cherish in our artists we condemn in our politicians. In our artists, we look for the many-coloured voice, the multiple sensibility. From our politicians though, we still look for ideological heroism, despite everything. We consider pragmatists to be weak....To me, this is a doleful conclusion. It is exactly men with such intellectual peculiarities that I have always hoped to see in politics. The voice that speaks with such freedom, thus unburdened by dogma and personal bias, thus flooded with empathy, might make a good president."

Max Hastings on the RIMH Potstdam's Germany and The Second World War

"The authors perceive a reality which still escapes many Germans: most of those who joined the July 1944 bomb plot against Hitler did so not because they recognised that he was evil, but because they were dismayed that he was losing the war: "Not all the conspirators were equally quick to see that the whole of the war conducted by the Wehrmacht was serving criminal ends."

"The Allies were delighted by the July plot, as clear evidence of fissures inside the German war machine. But they were also relieved by its failure. The prospect of having to negotiate with an army clique willing to make peace would open up all manner of ghastly difficulties with Stalin, while raising the American and British publics who would surely be tempted by a chance of ending the carnage.