Robert Wade in The New Left Review:

The downward spiral of credit contraction is being driven by a pervasive collapse of trust in the entire structure of financial intermediation that underpins capitalist economies. With debt levels running high and the economic climate worsening, many enterprises in the real economy must be close to bankruptcy; hence lenders and equity buyers are staying out of the market. Governments have therefore moved to stabilize credit markets by taking steps to encourage buyers to re-enter the market for securities—most notably the us Treasury, with its $700 bn bail-out scheme. Several European states have moved to steady the banking sector, with Ireland, Greece, Germany, Austria and Denmark guaranteeing all savings deposits in early October 2008. Competition rules have been set aside, as governments foster mega-mergers. In the uk, the recent merger of hbos and Lloyds tsb creates a bank with a 30 per cent share of the retail market.

The sheer monopoly power of such new financial conglomerates is likely to prompt a stronger regulatory response. Another key area to watch in terms of gauging the robustness of governmental responses is the market for Over the Counter (otc) derivative contracts—which Warren Buffet famously described in 2003 as ‘financial weapons of mass destruction’. Buffet went on to say that, while the Federal Reserve system was created in part to prevent financial contagion, ‘there is no central bank assigned to the job of preventing the dominoes toppling in insurance or derivatives’. In the event that more regulation of the otc market is implemented—even in the minimal form of requiring the use of a standard contract format and registration of the details of each contract with a regulatory body—Brooksley Born will have some satisfaction. She was head of the Chicago Futures Trading Commission in the late 1990s, and proposed in a discussion paper that the otc market should come under some form of regulation. Alan Greenspan, sec Chairman Arthur Levitt and Treasury Secretary Robert Rubin were so angry at her for even raising such an idea that they sought Clinton’s permission to have her fired; in January 1999 she duly resigned for ‘family reasons’.

by the banks’ demise.

From Edge:

DANIEL KAHNEMAN: I want to tell you a bit of straight psychology that I find very exciting, that I found more exciting this year than I had before, and that in some ways is changing my view about a lot of things in psychology. There are two big things happening in psychology today. One, of course, is everything that’s got to do with the brain, and that’s dominating psychology. But there is something else that is happening, which started out from a methodological innovation as a way to study memory, and we’ve always known, that’s the idea of the notion of association of ideas, which has been around for 350 years at least.

We know about how associations work because we have one thought, and when it leads to another‚windows and doors and things like that, or white and black‚and we have our ideas of associations, and it’s always been recognized as important and interesting. But our view of how associations work has been changed in a profound way by a technical innovation, which is something that happens a great deal in psychology and I suppose in all sciences. This innovation is the following: If, for example, you hear the word “sick”, there are few associations that come to mind. But there are a number of other things that you can do, that are little more refined. You can present words, and measure the amount of time that it takes people to read the words. Or you can measure words and non-words, and the task is to decide whether they’re a set of letters, or a word, or a non-word, and it’s the ease with which words are recognized as words as against non-words. I’ll begin by focusing on reaction time, because that’s the simplest one.

More here.

Let’s be honest—this new millennium, so far it’s been a huge disappointment. It was preceded by a false alarm (the Y2K rollover), was cursed by hanging chads (the Florida recount), and has been held hostage ever since by the ministry of fear, with Americans meekly removing their shoes for the privilege of flying in airplanes charging fees for pillows and blankets. It’s been seven years since 9/11, no follow-up attack has stabbed our shores, and yet the front pages of so many papers resemble the end is near signs toted by bearded prophets that were once a staple of New Yorker cartoons. The decade has traveled from bin Laden’s cave to the Dark Knight’s Batcave in a jagged thrust of clenched force and unleashed chaos. Even an unforeseen blossom of good news, such as the declining death toll in Iraq, seems almost incidental in the log stream of general lousiness. Journalism used to perform a higher civic function than it does today, so spanked up is it with gaffes, gotchas, spin-doctoring, celebrity pimping, crisis-mongering, minnow-brained punditry, drama criticism practiced from under the troll bridge (usually at the expense of Democrats—Al Gore’s sighings during the debate with George Bush, Hillary Clinton’s “cackle”), and instant amnesia. To watch archive footage of TV reporters from the black-and-white era with their measured intonations and ashen visages—before everybody burst into Michael Kors orange—is to crack open the crypt on a more responsible, somber, and, yes, duller era, when journalists still conducted themselves as a priestly caste serving the needs of an informed citizenry, as opposed to catering to cud-chewing dolts. Those days are gone and there’s no point in mourning them, the Walter Lippmanns and similar wise men (and women) having proved worse than useless when the Vietnam War sawed the country into two with its lies and delusions. But the intelligent drone of old-school journalism served to extend a support bridge through national trauma, the term “anchorman” symbolic of the media’s role in securing coverage of the news with weight and authority, a fixed point in a sea of raging foam. Now it’s all raging foam, a steady, indiscriminate diet of excitation to keep us permanently on edge.

more from Vanity Fair here.

My husband called it first. Then, a brilliant, 75-year-old scholar and raconteur confessed to me over wine: ‘I’m sexually attracted to her. I don’t care that she knows nothing.’

Finally, writer Robert Draper closed the file on the Sarah Palin mystery with a devastating article in this Sunday’s New York Times Magazine: ‘The Making (and Remaking) of McCain.’

McCain didn’t know her. He didn’t vet her. His campaign team had barely an impression. In a bar one night, Draper asked one of McCain’s senior advisers: ‘Leaving aside her actual experience, do you know how informed Governor Palin is about the issues of the day?’

The adviser thought a moment and replied: ‘No, I don’t know.’

Blame the sycamore tree.

more from the National Review Online here. (via Daily Dish)

Kathryn Jean Lopez’s weird denunciation of her own columnist here.

more explanation of the in-fighting and implosion here.

Early Friday Morning Update: Yesterday Thursday I gave a speech in London (see video below) arguing that markets were in sheer panic and becoming literally dysfunctional and unhinged. I also made the point that policy makers may soon be forced to close financial markets as the panic selling accelerates.

Indeed, we have now reached a point where fundamentals and long term valuation considerations do not matter any more for financial markets. There is a free fall as most investors are rapidly deleveraging and we are on the verge of a a capitulation collapse. What matters now is only flows – rather than stocks and fundamentals – and flows are unidirectional as everyone is selling and no one is buying as trying to buy equities is like catching a falling knife. There are no buyers in these dysfunctional markets, only sellers and panic is the ugly state of this destabilizing game.

And while panic and destabilizing market dynamics is the driver of financial markets even economic fundamentals are awful as investors are finally realizing that a severe US and Eurozone and G7 and emerging markets and global recession is coming and will be deep and protracted.

more from RGE Monitor here.

Catherine Ellsworth in The Telegraph:

Law enforcement officials say the intense public interest and historic nature of the vote could lead to violent outbreaks if people are unhappy with the results, encounter problems casting their ballots or suspect voting irregularities.

Police departments say they cannot rule out disorder and are mobilising extra forces and putting SWAT teams on standby.

In Oakland, near San Francisco, police will have tactical squads, SWAT teams and officers trained in riot control on standby.

“We always try to prepare for the worst,” said Oakland police department spokesman Jeff Thomason.

“This election is going to mark in history a change in the presidency: you’re going to have a woman in the presidency or an African American as president. I think everybody around here is voting for Obama, so if he gets in the White House everybody’s going to be happy.

“But we’ll have our SWAT teams on standby and traffic teams here, so if something goes off we’ll organise and take care of the problem.”

There have also been internet rumours about plans for protests or civil disobedience by supporters of Democratic candidate Barack Obama if he is beaten by Republican rival John McCain on November 4.

More here.

///
The Buried Rib Cage
Eve Grubin

Eve slipped from its arced ridge—
the only body part
you don’t
……do evil with:

the eye, the hand,
might beg
……corruption;

the ribs are modest
shy crests, ticklish,
…………an open fan,
not quite sexual, yet not puritan:

delicate accordian
………………—yawn, moan—
Soul breathes through the comb.

From Morning Prayer (Sheep Meadow Press, 2005)

Emily Waltz in Scientific American:

The waters of the Jersey Shore may soon become home to the nation’s first deepwater wind turbines. New Jersey officials recently announced the state would help fund an initiative by Garden State Offshore Energy to build a 350-megawatt wind farm 16 miles (26 kilometers) offshore. The state wants by 2020 many more of these parks, at least 3,000 megawatts worth, or about 13 percent of the state’s total electricity needs.

“This is probably the first of many ambitious goals to be set by states,” says Greg Watson, a senior advisor on clean energy technology to the governor of Massachusetts. “Three thousand megawatts is significant. With that you’re able to offset or even prevent fossil fuel plants from being built.”

The federal government is about to open up to wind energy development vast swaths of deep ocean waters, and states and wind park developers are vying to be the first to seize the new frontier. Wind parks in these waters can generate more energy than nearshore and onshore sites, they don’t ruin seascape views, and they don’t interfere as much with other ocean activities.

More here.

Sara Sidner at CNN:

Amar and Kundan Singh Pundir are brothers. Younger brother Amar breaks rocks in a mine for a living. Kundan farms their small piece of inherited land. They live in a beautiful but remote hillside village in the clouds of Himachal Pradesh, India.

Both aged in their forties, the two brothers have lived together nearly their whole lives. They are poor and share just about everything: Their home, their work and a wife.

“See we have a tradition from the beginning to have a family of five to 10 people. Two brothers and one wife.” Kundan says.

They practice what is known as fraternal polyandry — where the brothers of one family marry the same woman. Why? Tradition and economics.

Life is hard here. The village is precariously perched on the side of a very steep hill about 6,000ft up. Most of the villagers survive off tiny plots of cropland.

In this difficult terrain there isn’t enough land to go around. So, instead of finding separate wives and splitting up their inherited property, the brothers marry the same woman and keep their land together.

More here.

Omar began his tour d’horreur as the black sheep of a prominent Pakistani family. He was not conventionally ambitious. He went to college in America and graduate school in England, but couldn’t bring himself to become an academic. Upon returning to Pakistan, he failed the civil service exam (to the amusement of his father, a diplomat) and took a job teaching high school, which he did for almost ten years, though he found it boring. Mostly he did what he loved-he watched movies. All kinds, from mainstream Bollywood epics to obscure second- and third-tier Hollywood films to the indigenous outpourings of Lollywood, Pakistan’s own film industry. And he ate ice cream.

He ate a lot of ice cream. Having gone to college in Boston in the 1980s, the heyday of the independent ice cream store, he had acquired a taste for natural flavors and organic ingredients, as well as admiration for the “smoosh-in” (the original ice-cream-and-candy-bar hybrid). But the ice cream back home was brightly colored, generic, and tasteless. Worse, the ice cream shops in Islamabad were aimed squarely at children, complete with Mickey Mouse murals. One day Omar decided to try his hand at making ice cream for himself. When the results were encouraging, he thought about selling it to others, and in August 1995 he and his younger brother Ali opened a makeshift business out of their parents’ Islamabad home. It would not be safe for children. They called it the Hotspot.

more from Bidoun here.

However much we are inundated with bad news, it never ceases to surprise us. This time it came with the Czech weekly Respekt, which reported that in 1950 Milan Kundera informed the police on a person who was later sentenced to 22 years in prison. It came as a shock to me not because – like so many others – I admire Kundera as an author of novels and essays; I also know him personally. I have corresponded with him for several years on the subject of publishing Slovak translations of his French books. Respecting Kundera’s privacy, up until now I have been discrete about our correspondence and personal contact. The events of the last days have changed my position on this.

The way the affair has been presented to the world public is mind-boggling. The fact that Kundera himself learned about the allegations from the press is another great failure of journalistic decency. The insensitivity and arrogance of the authors of the article that provoked the scandal left me horrified. They start dramatically: “Milan Kundera has always carefully covered his tracks. He has given no interviews for the past quarter of a century. He visits his native country only incognito.”

more from Eurozine here.

While Dan Rice slapped brushloads of rabbitskin glue onto the cotton duck canvas, further loads would slop down, warm and pungent, on his head and shoulders. Mark Rothko teetered on a ladder above, heavy as a bear and notoriously cackhanded, rushing his handiwork so that the two of them could cover the entire stretch of fabric before the size cooled. Moving on to another canvas almost nine feet high, the workers might swap places, with Rice getting to rain down on Rothko. The residues that ran off them as they showered afterwards would have been tinted maroon: as a personal variant on standard procedure, Rothko liked to feed pigments into the pan on the hot plate, as his sheets of glue dissolved. That way, the stretched canvas would have a character – a complexion, at least – from the very outset, even before the two of them applied similarly coloured resinous primers to support the upper layers of brushwork. A complexion, a disposition, a bias; this object that Rice had hammered together for him, out of wood and coarse cloth bought at an awnings supplier on the Bowery, would bristle with an inbuilt material resistance.

more from the TLS here.

From The Gaurdian:

I moved into this room 20 years ago and spent the first five years fighting desks that weren’t right in some way. Eventually I had this one made – right size, filing cabinets and drawers in the right place – and it’s made such a difference. I write on an Apple Mac, but still can’t help thinking of technology as something of an enemy. I’m much fonder of things like the meat skewer paper knife given to me by my old and beloved agent AD Peters. He sent them to all his clients, but I’m probably one of the last to still use it.

My chair is one of the ugliest I’ve ever seen. But it is comfortable and moves around. I’ve long looked for a graceful chair that was any use and did once try one of those Swedish designs where you half kneel. But all that happened was my knees got exhausted and I couldn’t stop thinking “I am in this extraordinary chair” when I should have been concentrating on writing.

I work from about 10 in the morning to 1.30. I used to have another stint in the late afternoon, but I’m now 85 and one session a day seems enough.

More here.

From Scientific American:

The cyberpunk science fiction that emerged in the 1980s routinely paraded “neural implants” for hooking a computing device directly to the brain: “I had hundreds of megabytes stashed in my head,” proclaimed the protagonist of “Johnny Mnemonic,” a William Gibson story that later became a wholly forgettable movie starring Keanu Reeves. The genius of the then emergent genre (back in the days when a megabyte could still wow) was its juxtaposition of low-life retro culture with technology that seemed only barely beyond the capabilities of the deftest biomedical engineer. Although the implants could not have been replicated at the Massachusetts Institute of Technology or the California Institute of Technology, the best cyberpunk authors gave the impression that these inventions might yet materialize one day, perhaps even in the reader’s

own lifetime. In the past 10 years, however, more realistic approximations of technologies originally evoked in the cyberpunk literature have made their appearance. A person with electrodes implanted inside his brain has used neural signals alone to control a prosthetic arm, a prelude to allowing a human to bypass limbs immobilized by amyotrophic lateral sclerosis or stroke. Researchers are also investigating how to send electrical messages in the other direction as well, providing feedback that enables a primate to actually sense what a robotic arm is touching. But how far can we go in fashioning replacement parts for the brain and the rest of the nervous system? Besides controlling a computer cursor or robot arm, will the technology somehow actually enable the brain’s roughly 100 billion neurons to function as a clandestine repository for pilfered industrial espionage data or another plot element borrowed from Gibson?

More here.

///
After Reading a Child’s Guide to Modern Physics
W.H. Auden

If all a top physicist knows
About the Truth be true,
Then, for all the so-and-so’s,
Futility and grime,
Our common world contains,
We have a better time
Than the Greater Nebulae do,
Or the atoms in our brains.

Marriage is rarely bliss
But, surely it would be worse
As particles to pelt
At thousands of miles per sec
About a universe
Wherein a lover’s kiss
Would either not be felt
Or break the loved one’s neck.

Though the face at which I stare
While shaving it be cruel
For, year after year, it repels
An ageing suitor, it has,
Thank God, sufficient mass
To be altogether there,
Not an indeterminate gruel
Which is partly somewhere else.

Our eyes prefer to suppose
That a habitable place
Has a geocentric view,
That architects enclose
A quiet Euclidian space:
Exploded myths – but who
Could feel at home astraddle
An ever expanding saddle?

This passion of our kind
For the process of finding out
Is a fact one can hardly doubt,
But I would rejoice in it more
If I knew more clearly what
We wanted the knowledge for,
Felt certain still that the mind
Is free to know or not.

It has chosen once, it seems,
And whether our concern
For magnitude’s extremes
Really become a creature
Who comes in a median size,
Or politicizing Nature
Be altogether wise,
Is something we shall learn.

///

Laura Shapiro in Slate:

Nearly half a century after her death, we finally get to meet the woman who invented American good manners. Or tried to. Nowadays people who suspect their public behavior is making them look boorish don’t shudder with embarrassment—they gleefully display the evidence on YouTube. But we weren’t always like this, as Laura Claridge’s Emily Post makes clear. Straight through the Jazz Age, the Depression, World War II, and the early ’50s, Emily Post handed down rules of social behavior guaranteed to be authentic insignia of the upper class, and the nation kept begging for more. People loved her gracious air of certitude, whether she was advising on the proper wedding outfit for a second marriage (gray, with a small, matching hat) or how to manage telephone use when six neighbors had to share the same line. (“The rule of courtesy when you find the wire in use, is to hang up for three minutes before signaling. If there is an emergency, you of course say ‘Emergency!’ in a loud voice, and then ‘Our barn is on fire.’ “) Like Freud and Betty Crocker, the name “Emily Post” became shorthand for authority itself.

But her charmed perspective on what she called “best society” disintegrated soon after she died in 1960 and not just because the all-gray wedding pretty much fell from favor.

More here.

Alexander J. Motyl in Harvard International Review:

Ukraine is supremely fortunate that the Orange revolutionaries did not attempt to introduce fundamental, comprehensive, and rapid change. Had they tried, they would have failed, and Ukraine’s population—saddled with broken institutions and violence-prone elites—would have been far worse off today than it is and would have had far fewer prospects for meaningful reform than it now has. Historical record shows that revolution as a “great leap forward” results in countries falling flat on their face, as China witnessed in the early 1960s. The shock therapy endorsed by Western economists at the Cold War’s close appeared to work in Poland only because Poland had already undergone evolutionary change since 1956. When applied to Russia by Boris Yeltsin’s weak democratic regime, shock therapy failed and instead helped create a super-presidential regime that ultimately made Putin’s return to authoritarianism possible.

There are four reasons that revolutions as massive transformations fail. First, changing a country fundamentally, comprehensively, and rapidly requires enormous financial, coercive, and bureaucratic resources that revolutionaries, as outsiders, usually lack. The only revolutionary transformations that may have come close to achieving their goals have been imposed from above by brutal dictators such as Adolf Hitler and Joseph Stalin or by occupying armies ruling over prostrate countries, such as post-World War II Germany or Japan.

Second, massive change always generates massive opposition that requires equally massive applications of force and violence to overcome. Democrats and reformers generally prefer to avoid such violence. However irresistible the temptation, democrats would be well advised to eschew revolutionary rhetoric because they always make bad revolutionaries who cannot deliver. On the other hand, populations should be wary of authoritarians promoting revolution, precisely because they make good revolutionaries and can deliver.

Third, projects of massive change require calculating the consequences of thousands of interrelated minor changes—a task beyond the intellectual or political abilities of any leadership.

The very brilliant Avinash Dixit (© voxEU.org)in Vox:

The traditional theory of international trade was cast in the traditional framework of microeconomic theory, namely perfect competition. Differences among countries in their endowments of factors of production and in their technologies explained trade. A relatively labour-abundant country would have a comparative advantage in producing goods that required relatively more labour in their production, and would export these goods so long as the country did not have an even greater bias toward consuming exactly the same goods. The outcome, as so often with perfectly competitive markets, was efficient resource allocation; each nation stood to gain from trade.

By the early 1970s, this picture was increasingly thought to be anachronistic. Trade in perfectly competitive markets, where thousands of producers of cloth in England and wine in Portugal traded their goods, seemed a poor model of trade with two or three giant firms making aircraft or computers. Voices for protectionism are always looking for arguments they can voice; they could now claim that traditional theorems on gains from trade did not apply to this modern reality. A new theory for this new world was needed.

Krugman was the undisputed leader of the group that took on this task. To quote and paraphrase Stephen Jay Gould (The Flamingo’s Smile, pp. 335, 345), Krugman has won his just reputation because he grasped the full implication of the ideas that predecessors had expressed with little appreciation of their revolutionary power. He had the vision to make the idea work in two ways, using it to make new discoveries and by recognising its implications as a far-reaching instrument for transforming general attitudes.