The Last Temptation of Risk

Barry Eichengreen in The National Interest:

THE GREAT Credit Crisis has cast into doubt much of what we thought we knew about economics. We thought that monetary policy had tamed the business cycle. We thought that because changes in central-bank policies had delivered low and stable inflation, the volatility of the pre-1985 years had been consigned to the dustbin of history; they had given way to the quaintly dubbed “Great Moderation.” We thought that financial institutions and markets had come to be self-regulating—that investors could be left largely if not wholly to their own devices. Above all we thought that we had learned how to prevent the kind of financial calamity that struck the world in 1929.

We now know that much of what we thought was true was not. The Great Moderation was an illusion. Monetary policies focusing on low inflation to the exclusion of other considerations (not least excesses in financial markets) can allow dangerous vulnerabilities to build up. Relying on institutional investors to self-regulate is the economic equivalent of letting children decide their own diets. As a result we are now in for an economic and financial downturn that will rival the Great Depression before it is over.

The question is how we could have been so misguided. One interpretation, understandably popular given our current plight, is that the basic economic theory informing the actions of central bankers and regulators was fatally flawed. The only course left is to throw it out and start over. But another view, considerably closer to the truth, is that the problem lay not so much with the poverty of the underlying theory as with selective reading of it—a selective reading shaped by the social milieu. That social milieu encouraged financial decision makers to cherry-pick the theories that supported excessive risk taking. It discouraged whistle-blowing, not just by risk-management officers in large financial institutions, but also by the economists whose scholarship provided intellectual justification for the financial institutions’ decisions. The consequence was that scholarship that warned of potential disaster was ignored. And the result was global economic calamity on a scale not seen for four generations.

A Profile of Andrew Sullivan

Sullivan-1 Over at the Economist's Intelligent Life:

Andrew Sullivan’s story is inherently implausible. How did an HIV-positive gay Catholic conservative from the poky English town of East Grinstead end up as one of the most powerful writers in America?

Today his blog, the Daily Dish, is regularly named as one of the most influential in America, and in November it reached 23m hits in the month. Politicians from Condoleezza Rice to Barack Obama himself have courted Sullivan in the hope of friendly posts. After he moved his blog to the website of the venerable Atlantic Monthly magazine, the traffic there rose by 30%.

This is all the stranger since—unlike other big-name bloggers such as the liberal-Democratic Markos Moulitsas of the Daily Kos or the libertarian Republican Glenn Reynolds of Instapundit—he has no obvious political constituency. Sullivan is regarded by his critics as an attention-deficit bundle of contradictions. He is a conservative Christian who rages against the self-proclaimed forces of conservative Christianity. He is a pioneering crusader for gay marriage savaged by the gay left as “chief faggot”, herding homosexuals on behalf of The Patriarchy. He admits: “I’m very uncomfortable with audiences who agree with me… I’ve never really had a place where someone didn’t dispute my right to be there.” So what is the glue that holds together the blogger-king?

In a series of long interviews, Sullivan—a friend of mine—talks me through his story.

A long, slow descent into hell

Romesh Gunesekera in The Guardian:

ScreenHunter_09 Apr. 30 23.52 For 26 years the main story in Sri Lanka has changed little: bombs, bullets, carnage and suffering. LTTE suicide bombs on buses, at train stations, suicide trucks at the Temple of the Tooth, the Central Bank, the assassination of one president, the wounding of another, and government military campaigns with increasing firepower and increasing casualties, terrifying air strikes and massive bombardment. Sadly, there have been other spikes of horror in the country with tens of thousands of dead – the 2004 tsunami, floods, the 80s insurrection in the south, disappearances, abductions – but the war has gone on relentlessly, in one area of the north or another, with only short periods of truce in which the Tigers and the government each gathered strength for the next round.

In those 26 years the great map of the 20th century was transformed: the Berlin wall came crashing down, Germany was reunified, the Soviet Union disappeared, China became the factory of the world and India boomed. But in Sri Lanka, the story remained the same.

A country that was once an admirable model of democracy, leading the way in agrarian reform, quality of life indices, and health and education services, got stuck as the prototype for suicide bombers on the one hand, and the new benchmark for “shock and awe” tactics with unbridled military muscle on the other. I find it difficult to believe that it was allowed to happen.

More here.

The Humanitarian Disaster in Sri Lanka

31lanka_600Meenakshi Ganguly in openDemcracy:

Tens of thousands of terrified civilians are trapped in a dangerous conflict-zone. The military says that the remaining LTTE cadre – along with their leader, Velupillai Prabhakaran – have effectively hidden themselves among the civilians in a government-declared “no-fire zone”. As the military plans the final defeat of the LTTE in this twenty-six-year conflict, the fact that the army has repeatedly and indiscriminately shelled these zones means that fear for the safety of civilians has increased.

This terrible plight of civilians is hardly surprising.

The LTTE has itself long been responsible for horrific human-rights abuses. These include forcibly recruiting people to serve its cause; turning schoolchildren into combatants; using Claymore landmines and human-bombs; indiscriminate killings and outright murder. During the 2002-08 ceasefire, the LTTE continued to commit systematic human-rights abuses, not least in the territory it controlled.

Sri Lankan governments, in an effort to appease the majority Sinhalese population, have consistently failed to address Tamil grievances; this has helped the Tigers to build support among the Sri Lankan Tamil diaspora. But the present government of Mahinda Rajapakse is hoping that its current military campaign will finally mark an end of the LTTE. Since 2006, when both sides resumed major military operations, the conflict has killed and wounded thousands of civilians and displaced hundreds of thousands, leaving many suffering from disease and hunger.

Read more »

How to Be Black at the Beach

From The Washington Post:

Book No one writes with more acrobatic imagination and good humor about the complexities of race in America than Colson Whitehead. In “The Intuitionist” and “John Henry Days,” he evoked the nation's racial history as deftly as he created bizarre alternatives. And in his 2003 paean to his home town, “The Colossus of New York,” he captured the choreography of a vibrant, multicultural city. Now he surprises us again with a charming autobiographical novel that comes honey-glazed with nostalgia. Detailing the life of a dorky teenager in a community that's peculiar but oddly familiar, “Sag Harbor” is a kind of black “Brighton Beach Memoirs,” but it's spiced with the anxieties of being African American in a culture determined to dictate what that means.

Like Stephen Carter, Whitehead writes about an enclave of upper-middle-class blacks, in this case a contented but separate summer resort on Long Island. (Whenever the narrator mentions Sag Harbor to white people in New York, they say, “Oh, I didn't know black people went out there.”) Straddling parts of East Hampton and Southampton, Sag Harbor is an ancient town by American standards, a whaling community that predates the Revolution (it's mentioned in “Moby-Dick”). But the 20-acre section that Whitehead celebrates was settled in the 1930s and '40s by blacks from Harlem, Brooklyn and parts of New Jersey, professional people who “had fought to make a good life for themselves, vanquished the primitives and barbarians out to kill them, keep them out, string them up, and they wanted all the spoils of their struggle. A place to go in the summer with their families. To make something new.”

More here.

Handle With Care

From Proto Mag:

Abraham The word care, in a medical sense, implies the many things physicians do for patients, among them: ordering tests, writing prescriptions, performing surgery. Or perhaps used to do. Abraham Verghese, an infectious disease specialist and professor at the Stanford University School of Medicine, thinks doctors have distanced themselves from the word’s basic definition: to show empathy and compassion. “The patient in the bed is merely an icon for the real patient, who exists in the computer,” Verghese has lamented.

At the center of Verghese’s first work of fiction, Cutting for Stone (Knopf, February 2009), is compassion shown and withheld—between physicians and patients, and physicians and their families. In Addis Ababa in the 1950s, twins Marion and Shiva are born to Indian nun Sister Mary Joseph Praise and British surgeon Thomas Stone. When Praise dies giving birth, Stone abandons the twins, who are raised—and eagerly inducted into medical careers—by married doctors. Marion leaves Ethiopia to complete his residency in the Bronx. On a visit to a Boston teaching hospital, he sits in on a morbidity and mortality conference (an examination of cases gone wrong) and sets eyes on his father for the first time.

More here. (Note: Thanks to Sughra Raza)

The Dilemmas of Graduate Education

Brainstorm_bousquetMark Taylor's op-ed on graduate education in the NYT has generated a lot of discussion. One of the more critical responses has been from Marc Bousquet, author of How the University Works, in The Chronicle of Higher Ed:

Why golly, the problem with the university is that there aren’t enough teaching positions out there to employ all of our excess doctorates Mark C. Taylor says: “Most graduate programs in American universities produce a product for which there is no market (candidates for teaching positions that do not exist).” Because there are just too many folks with Ph.D.‘s out there, “there will always be too many candidates for too few openings.”

Um, nope. Wrong. The New York Times loves this bad theory and has been pushing it for decades, but the reality is clear.

In fact, there are plenty of teaching positions to absorb all of the “excess doctorates” out there. At least 70 percent of the faculty are nontenurable. In many fields, most of the faculty don’t hold a Ph.D. and aren’t studying for one. By changing their hiring patterns over the course of a few years New York or California — either one — alone could absorb most of the “excess” doctorates in many fields.

Bousquet follows up in The Valve:

Read more »

Future Cities

This years World Science Festival is just a few weeks away (June 10 to June 14). From last year's festival:

Mitchell Joachim is an architect and urban designer as well as a partner in Terreform, a New York—based organization for philanthropic architecture and ecological design. His design of a compact, stackable “city car,” developed with the MIT Smart Cities Group, won the 2007 Time Magazine Best Invention of the Year.

Not Easy Being Greene: Graham Greene’s Letters

GGreene Michelle Orange in The Nation:

“If anybody ever tries to write a biography of me,” Graham Greene once mused, “how complicated they are going to find it and how misled they are going to be.” It's a sentiment often held up by Greene's biographers as a kind of immunity medallion: his intractability appears to surpass that of even your average manic-depressive titan of twentieth-century literature, yet it is paradoxically essential to understanding his character.

Canadian scholar Richard Greene, who is no relation to the author, brandishes this medallion in the preface to Graham Greene: A Life in Letters, a new collection he has assembled from the tens of thousands of letters Greene wrote over his lifetime. A chief attraction of this volume is the access RG received to several recently discovered troves of letters, many written to Greene's family members, which were not available to previous biographers. Nevertheless, RG warns, “The sum of all these discoveries is to make Graham Greene a stranger to us again.”

A stranger with no shortage of calling cards: devout Catholic, lifelong adulterer, pulpy hack, canonical novelist; self-destructive, meticulously disciplined, deliriously romantic, bitterly cynical; moral relativist, strict theologian, salon communist, closet monarchist; civilized to a stuffy fault and louche to drugged-out distraction, anti-imperialist crusader and postcolonial parasite, self-excoriating and self-aggrandizing, to name just a few. “But who are you, Mr. Greene?” Yvonne Cloetta, his last mistress, remembered Greene being asked throughout his career. “I am my books,” he insisted, a problematic deflection for several reasons, the most obvious being that the Greene oeuvre and its secondary materials support any number of conclusions about who their creator was and what he believed.

Emmanuel Saez Awarded J.B. Clark Medal

Peter R. Orszag, Director of the OMB, on the award of the John Bates Clark medal to Emmanuel Saez:

Emmanuel is perhaps best known for his detailed examination of how wages at the top end of the U.S. income distribution have evolved over the past century. He and his co-author Thomas Piketty discovered that the overall pattern for the share of income accruing to those in the top 10 percent is U-shaped (see chart 1 below). Thus, the share going to the top 10 percent was around 45 percent from the mid-1920s to 1940, but then declined to approximately 33 percent during World War II. Emmanuel attributes this fall-off to the sharp reduction in capital incomes brought about by the war and the revenue increases needed to finance the war effort. After the war, the share of income accruing to the top 10 percent remained essentially flat until the late 1970s, when it began climbing dramatically, ultimately surpassing its pre-war highs. Indeed, in 2006, the top 10 percent earned 50 percent of national income, a higher share than even in 1928, the peak year of the “roaring twenties” stock market bubble.

Chart 1: Share of Total U.S. Income Accruing to the Top 10%, 1917-2006

Perhaps even more interesting than his findings about the evolution in earnings for the top 10% is what he found when he isolated data from just the top 1 percent of earners—namely, that virtually all the historical fluctuation in the share of income going to the top 10 percent was due to fluctuations in income within the top percentile alone (see chart 2 below).

Wednesday Poem


Out of sight, out of mind, they say; but
what do they really know? –August O’Rielly

The Meadow
Marianne Larsen

this evening the meadow seems the essential thing
and because of it
what we talk about this evening
includes stalks and streams and frogs
and insects and eggs and blackbirds
and lack of worries about work and contracts
rent contracts and other contracts
this evening
not far from us the children are walking
hand in hand with their grown-ups
it is a meadow
true, there’s a city on top of it

amis loved ballard

JG-Ballard-001

I first came across Ballard when I was a teenager. He was a friend of my father’s, and my father championed his early work, calling him “the brightest star in postwar SF” (all purists call science fiction SF, and have nothing but contempt for “sci fi”). Ballard was a beautiful man, with a marvellously full, resonant face and hot eyes, and talked in the cadences of extreme sarcasm with very heavy stresses – he wasn’t being sarcastic, merely expressive. The friendship between the two did not survive Ballard’s increasing interest in experimentalism, which my father always characterised as “buggering about with the reader”. But I was always delighted to see Jim later on. Funnily enough, he was an unusually lovable man, despite the extraordinary weirdness of his imagination. His imagination was formed by his wartime experience in Shanghai, where he was interned by the Japanese. He was 13 at the time and took to the life in the camp as he would “to a huge slum family”. But it wasn’t just the camp that formed him – it was the very low value attached to human life, something he saw throughout his childhood. He told me that he’d seen coolies beaten to death at a distance of five yards from where he was standing, and every morning as he was driven to school in an American limousine there were always fresh bodies lying in the street. Then came the Japanese. He said “people in the social democracies have no idea of the daily brutality of parts of the east. No they don’t, actually. And it’s as well that they don’t.”

more from The Guardian here.

the cia sucks

090427_FW_MohammedTN

Surely the most flabbergasting single disclosure in the recently released interrogation memos is the revelation that Khalid Sheikh Mohammed, captured on March 1, 2003, was put to the water-board 183 times that month, or about six times a day. This can really only mean two things: that the method is very crude and inexact and/or that his interrogators were in a state of panic and under insane pressure to produce results. I have myself been water-boarded under controlled conditions, and it isn’t possible to imagine undergoing it that number of times unless one was seeking martyrdom (which may well be the case with KSM, who is still demanding the death penalty from us). The memorandum rather silkily argues that “before the CIA used enhanced techniques,” KSM was resisting “giving any answers to questions about future attacks,” but if he was apprehended on March 1, 2003, and then “dunked” 183 times in the next 31 days, it suggests in the dry words of Scott Shane in the New York Times that “interrogators did not try a traditional, rapport-building approach for long.” Here is a seldom-mentioned reason why the CIA might go crazy in this way, to the point where even the FBI and other agencies were cripplingly (for us) reluctant to cooperate with it. On 9/11, according to Bob Woodward, George Tenet audibly hoped that the suicide-murderers of al-Qaida were not connected to the shady-looking pupils at those flight schools in the Midwest. The schools, that is to say, about which the CIA knew! In other words, and not for the first time, the CIA (which disbelieved the evidence of Saddam’s plan to attack Kuwait in 1990 and continually excused him as a “secularist”) had left us defenseless and ignorant.

more from Slate here.

goddam birds

A-murmuration-of-starling-001

The birds are back in woods behind my house. Wrens, nuthatches, tree-creepers; from first light their bright calls spill into my sleep. After a winter watching a monoculture of jackdaws floating over the lake like delicately made marionettes, the inhabitants of An Atlas of Breeding Birds in Cumbria have begun to spill into the peripheries of my poems. What is that draws poets to birds? And why have so many turned to them at critical points in their own writing? The collective nouns we all remember from childhood speak of language’s innate fascination with all things avian: a murder of crows, a murmuration of starlings, a parliament of fowls. And it’s no coincidence we afford them the most poetic collective nouns: right from the birth of literature birds have been present.

more from The Guardian here.