by Melanie Friedrichs

The Icarus Factor: Interpreting Financial Crisis through the Capacity-Output Cross

In finance, the “Icarus factor” describes the dangerous over-excitement that leads company managers to take on projects too risky or too ambitious for the company to handle. But can the story of Icarus apply to a bigger picture? Perhaps the economy is like a company; it can only handle so much real estate speculation, so many collateralized debt obligations, so much easy credit before it begins to get uncomfortably hot.

A Short Summary of The Capacity-Output Cross

Two weeks ago I introduced the “capacity-output cross,” a new way to conceptualize the causal role of money and finance that came from thinking about how classical theorists—Adam Smith, David Hume, John Maynard Keynes, F.A. Hayek, Milton Friedman—differ in their interpretations of the equation of exchange, MV = PQ. I renamed Q real output proposed a new term: capacity for exchange, roughly equal to M times potential V determined by the state of financial innovation and the strength of institutions. Neither quantity is measurable, but real output can be imagined as utility value of all goods and services produced during a given period of time, and capacity for exchange can be imagined as the amount of money available to be spent during a given period of time, recognizing that within that in any given period some dollars will be spent more than once.

I sketched economic history with the two lines. Capacity crosses Real Output, because it is usually easier to mine or print money or to improve institutions than it is to increase the efficiency of production and make more real value. The lines cross at different times in different markets and in different places, but as an example I suggested that the economy of northern Europe “crossed” during the expansion of coinage and banking during the 18th century, sometime around the time of Hume and Smith.

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by James McGirk

I do not follow contemporary cinema, but with the Oscars looming, I felt obliged to weigh in on the moving image as I experience it. Since I do not own a television and lack the sophistication and desire to sift through darknets and peer-to-peer file-sharing networks hunting for shows to download, I have resorted to Youtube’s never-ending supply of serial killer documentaries. Most are grainy and since the channels tend to abruptly disappear, are more than likely illegally uploaded. With any other genre this would be unbearable, but the crappiness of the viewing experience adds grit to these shows, which are usually collages of old photos and interviews, and the experience of watching a psychopathic killer delivered to justice becomes all the more deliciously unsettling.

After watching hundreds of these shows from all over the English-speaking world, I have begun to autopsy the peculiar relationship between the police, the bereaved, the media, and the public. There are remarkable differences between an Australian, an American, an English or even the rare Canadian depiction of society’s most heinous crime.

A serial killer is a murderer who has killed at least three people, with a refractory period, that is a length of time, between killings. There tends to also be a psychological motive, though many plunder their victims’ possessions, deep down serial killers kill because they want to or have to. The really famous ones often have a prurient interest in killing, and some of the most frenzied do horrific damage to their victims' bodies. These cases are full of sex, violence and vivid characters, and almost always have a thrilling conclusion in the form of a detective solving an increasingly violent series of murders. In other words, serial killers are the perfect fodder for television shows, or at least they would be if it weren’t for the fact that they must always balance on the narrow ledge between good taste, respect for the killers’ victims and the salacious detail their viewers crave; the latter element varies dramatically from country to country.

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by Haider Shahbaz

Kashif is a novelist who is afraid of novels: they all remind him of his failure at love. Novels, with the futility of each word, with the reflection of each phrase, with the silent spaces between sounds, remind him of nothing but loss. His novels are nothing but bloody fights with the memories of lost paradises and lost homes and lost loves.

Now that he is eighty and has a pearly beard and a semi-bald head, Kashif is writing The Last Novel. He is writing his last novel on his first love: Monika. He wants to be done, for ever and ever, with memories of Monika. Once finished, he has decided, he will spend the rest of his days watching television. Or doing anything that will not remind him of his failure at love. And if everything, really everything everything, still reminded him of nothing but his failure at love, he will commit suicide. And be done with it.

One thing is certain: this novel– the one he is writing now – will be his last one, if he ever manages to finish it. Despite the tremendous success of his previous novels, this novel is to be the one that will complete all he wants to say about fear and beauty and memory. But before we talk of novels and suicides, we must talk of love. Kashif is thinking of love because his son, Rashid, is coming to visit him. Without admitting it to himself, Kashif has decided that his son is his last chance at succeeding in love. His last chance, in other words, of getting over his memories of failed love and finishing The Last Novel.

********************

Kashif lives alone, ridiculously alone, in his comfortable house in the countryside of Wales. Countless years ago, fifteen to be exact, on June 8^th, Kashif came here to write The Last Novel. He lives with nothing but books. Or should we say: memories and fear. They are strewn all over the place. They stack up against whole walls. They litter the floors of all the rooms. They sleep with him and eat with him and bathe with him and sit outside on the open porch with him. They are, in a word, everywhere.

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by Mara Jebsen

It came to me at the hairdresser’s. A sort of image-idea about birds and goodness. Karen had me in one of those retro-space-age bubble-things and the air was roaring around my ears, drying. “I grow blonder as I speak,” I kept thinking, though I wasn't speaking. Just thinking loudly through the rarified air.

Over by the window, Karen, all wrist, was erasing wings of silver-black from the temples of her client. The client’s beautiful beak-like nose grew ever more defined in the sun of the windowpane; the tufts drifting like feathers to the linoleum floor, mixing as they fell. They landed silver-brown in sunlight, like tree-bark in winter, like strokes of pencil-lead . . .

There were many women in the room: another client with hair like my sister’s (dry clouds springing from the skull; tall as an outstretched hand). I saw the hairdresser press a little piece between the knuckles of two outstretched fingers, and scissor a bit off. The girl’s eyes gleamed joyfully towards themselves in the mirror. Her hairdresser's own hair was similar, but oiled down to shaped curls. The women seemed ambivalent about this act of 'taming’; were more intent on the power of the raw material. And in its cutting, the space between them filled with camaraderie so palpable, it was nearly communion.

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On Seeing Bahadur Shah Zafar
The Last Mughal Emperor
1775 – 1862

The king is a subject—
A world
Reversed

Son of a pig—
A viceroy will take pleasure
In a king exposed

Bolstered on a charpoy—
Gaunt in white kurta;
Block-printed pajamas?

Long stem of a hookah—
A humid verandah
A garrison in Rangoon

Exiled—
O, Delhi,
The Red Fort

Yesterday –seems ages ago–
Court painters painted
His portrait for posterity

Slithers of their brush—
A halo “God’s Shadow”
Honorifics

Cross-legged regalia—
Woven gardens
Blooming beneath his feet

Subjects trembling—
In front of him as they had
In front of his father and his

The garden ravaged—
Zafar, a memory of his splendor
Restraint of his sigh, itself a sigh

Rafiq Kathwari is a Monday poet at 3Quarks Daily.

by Maniza Naqvi

“Life, Madam is full of little, little inconveniences.” The receptionist, in a soothing tone, wearing the uniform of a friendly welcoming smile had said. “I do apologize for the delay but please give us half an hour and your room will be ready. In the meantime please enjoy our hotel lobby café and complimentary welcoming tea.” He suggested, with a wave of his hand towards a space behind her. “It will only be a half hour.”

The white noise of the in house music tinkled in the background and beckoned her to be understanding and on good behavior. There was nothing to be done but wait. Her room wasn’t ready, her predecessor had left it in a mess apparently—hence the delay—and by the explanation given, she imagined that, floors had to be disinfected and so on.

Sleep deprived, she sits nursing her second cup of jasmine tea, struggling not to fall asleep in the armchair which was placed near a large potted fern.

“I thought it was you! What are you doing here?”

She starts and looks up, she hasn’t seen him in over a year—he looks the same—bloated belly, bloated face–too much whiskey. His mane of once, grey hair now white and thinning. The trade mark denim shirt still in place, the urban legend, himself.

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by Jeff Strabone

Brown v. Board of Education. The Voting Rights Act. Miranda v. Arizona. Roe v. Wade. Texas v. Johnson. The Americans with Disabilities Act. Same-sex marriage. Looked at one way, the past several decades in the United States have been an almost uninterrupted series of victories for the American left and its activist model of advancing civil right and civil liberties through litigation and legislation.

Looked at another way—in terms of tax justice, financial regulation, and income disparity—the economic right wing has dominated American politics for the past thirty-plus years. In the face of little popular resistance and with assistance from both major political parties, the richest Americans and the most powerful corporations have had a free hand to rewrite the tax code and the banking laws to enrich themselves, endanger the world economy, and deprive government of the revenues it would need to, as the Constitution puts it, ‘promote the general welfare’.

As income inequality in the States approaches banana-republic levels, Americans are finally having a long-overdue national conversation about taxes, banking laws, and economic justice, but why were we not having this conversation all along? The singular focus on civil rights without a comparable commitment to tax justice may also be the greatest failure of the American left. While it is inarguably a great achievement that any child, regardless of color, can now swim in a public pool, that opportunity means little if tax revenues shrink to the point where cities can no longer afford to open the pools, let alone build new ones.

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“When the rich get too rich and the poor
get too poor, there is a way.”
…………….. —Pearle Buck, The Good Earth
.
Quake

when the rich get too rich
the sky falls
when the poor get too poor

there is a way:

see what breaks
over a fault when plate
pushes plate

even stacked bullion falls

it’s a grim scene
when all work meets
at an edge
when what’s raw
surges volcanic through
stone pipes stifled hope
singes the landscape,
plows plantations
under, sinks
mistaken dreams,
exhaults valleys, scours peaks
so they’re buzz-cut
as a military head —when
even air burns
all suck equally
from a bountiful
karmic void

when the rich get too rich
day leaves
when the poor get too poor

wide night comes
.

by Jim Culleny 2/9/12

by Rishidev Chaudhuri

Luca Turin and Tania Sanchez's “Perfumes” is an intriguing (and rather wonderful) collection of reviews of various scents. It is hard to write about smell while avoiding cliches: smell is almost always seen as a primitive, noble-savage sort of sense, pre-verbal and inextricably linked to sex and memory. They, on the other hand, start with the assumption that smell should be taken seriously as an artistic medium, and that viewing perfume simply as bottled memory or barely sublimated sexual enticement is misleading. Perfume is not simply mimetic, not simply trying to smell like the natural world, and we should take olfactory abstraction as seriously as we do visual abstraction. This makes for an often odd collection of perfume reviews. After all, what does one make of reviews like these:

“The result was the powderiest, rootiest, most sinister iris imaginable, a huge gray ostrich-feather boa to wear with purple devore velvet at a poet's funeral”

“The surprise effect of Le Feu d'Issey is total. Smelling it is like pressing the play button on a frantic video clip of unconnected objects that fly past one's nose at warp speed: fresh baguette, lime peel, clean wet linen, shower soap, hot stone, salty skin, even a fleeting touch of vitamin B, and no doubt a few other UFOs that this reviewer failed to catch the first few times.”

“Maurice Roucel has a knack for putting together perfumes that feel haunted by the ghostly presence of a woman: Lyra was a compact, husky-voiced Parisienne, Tocade a tanned, free-as-air Amazon…. However it did constrain the woman inside Envy to be at once seraphic and sub-urban, complete with the sort of suppressed anger that such a creature would feel at being reincarnated as a florist in Eastern New Jersey.”

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by Hasan Altaf

One of the main differences between fiction and nonfiction might be, to use the phrase of writing workshops, between showing and telling: Fiction shows us other lives, what those other lives are like, how it might feel to be living those lives; the other tells us, laying out the context, the backstory, the rules of the game. Both forms are important, but fiction seems to me the more powerful, as stories speak to us at a more visceral level than do facts – to our emotions, rather than our intellect. There is overlap between the two genres, however, and while fiction can succeed without giving us the information of nonfiction, the strongest journalism is usually that which adopts the techniques of fiction to give us both story and background – some of Arundhati Roy's essays, for example, or Joan Didion's – that journalism which gives us both narrative and analysis, the question and some semblance of an answer.

It is easy, when reading Katherine Boo's Behind the Beautiful Forevers, to forget that one is reading nonfiction at all; the book feels more like a novel, and it is in fact tempting to read it as one. The careful, in-depth reporting and the meticulous research of an excellent journalist are there, but far more striking are the attributes of a novelist – the empathy and the insight that Boo brings to her writing. The style is also deliberate: Boo excludes herself almost entirely, writing instead from the perspective of her characters, letting them show us the story of their lives and their community. These people aren't case studies, side-barred in a study; they're individuals, every one of them sympathetic and understandable. The result is an incredibly rich portrait of unique, fascinating, frustrating people, doing their best to get by in a particular community and particular landscape.

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by Kevin S. Baldwin

Sometime early in my grad school studies I went vacationing in Hawaii with some family. Their idea of fun was shopping. Mine was snorkeling and hiking. One of my hikes was down into the crater of Haleakala, the volcanic peak on Maui. After my ascent out of the crater, I noticed that there were a number of observatories near the summit. The high elevation and relative isolation of the mountain meant that atmospheric disturbance and light pollution would be low and visibility would be high. I vowed to return that night to see for myself why the observatories were there.

After dark I drove our rental car back up to the summit, parked, shut off the lights and waited inside the car in a sleeping bag (the air temperature was around freezing, the wind was pretty ferocious, and I had not packed winter clothes for a trip to Hawaii). As my eyes adjusted, the night sky unfurled before me. I had not spent all my life in the big city, where only the moon, a couple planets, and the brightest stars can be seen regularly. I had enjoyed a fair amount of time camping in the Mojave Desert, where the Milky Way stretches across the night sky, but I was not prepared for this. The number of stars I could see was two orders of magnitude higher than what I had ever seen in the desert. The Milky Way, instead of being a wash of white, was composed of many individual points of different colors. Clusters of stars took on a fractal quality with clusters embedded within clusters within clusters. I was awestruck. So many stars! How many had planetary systems? Which ones no longer existed? How insignificant was I in the grand scheme of things? It was profoundly humbling and simultaneously liberating. As awesome as the snorkeling on Maui was, that night of staring at the sky is likely one of the experiences that I will take to the grave.

On another occasion in the early 1990's I was camping on Pine Mountain in northern Ventura County, California. The sun had set, the stars were beginning to shine and it was exceptionally clear. Suddenly I noticed a satellite gliding across the sky in a polar orbit. I guessed it was a spy satellite based on the size of its reflection and its speed and direction. It was one of those bittersweet moments: Techno-triumphalism crossed with McKibben-esque “End of Nature” angst. It was hard not to take a certain amount of pride in our ability as a nation and species to launch a school bus sized object into orbit that could discriminate license plates from hundreds of miles away. On the other hand, having my view of the night sky altered by this rapidly moving point of light that commanded my attention was disturbing. Was there place no left that had not been altered by our hand? My ambivalence faded a bit when the technology used to build and launch spy satellites was turned away from the earth in the form of the Hubble Space Telescope and photos like the Pillars of Creation and the Hubble Deep Field and Ultra-Deep Field began to filter into our collective consciousness. Who could not be profoundly affected by contemplating these images?

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by Melanie Friedrichs

Nearly every economist who has written about money, from David Hume to Milton Friedman, has disagreed about its role in the economy and its influence on real economic growth. Underlying each argument is the same question, asked but never answered: is money causal? Today it seems like everyone’s got a different idea about what money is and where it’s going. The bond sharks fear deflation and depression, the gold bugs fear hyperinflation, and governments fear excess in either direction but disagree about how to keep the economy under control. Yet most college freshman learn that money is “long- term neutral” in economics 101. If money doesn’t matter, why are we worrying? Perhaps because despite the theory that argues otherwise, we know that the glass condos built in Baltimore and houses standing empty post-mortgage market slump are very real and were built because of money. In this post I propose a different way to conceptualize the money’s causal role, derived not from data, but from a comparison and reconciliation of the views of classical theorists.

A Short History of the Theory of Money

The first economists writing in the late 18th century used a thought problem to conclude that money has a causal effect on prices, but no causal effect on output. If suddenly the supply of money in a nation doubled, prices would double as well, and but would produce only a nominal change; real output would remain the same in the long run. However, David Hume also observed that silver arriving from the new world seemed to stimulate industry as European merchants and craftsman scrambled to produce for Spain’s new wealth. Adam Smith lauded the introduction of fractional reserve banking in Glasgow as a significant reason behind the city’s economic development. Both positions seem to suggest that money causes more than a nominal change. Indeed, outside of the academic economics, popular history nearly always paints finance as causal, with increasing bullion facilitating trade in markets near and far, fledgling banks financing the first factories of the industrial revolution, and the Bank of England’s gold standard leading to a century of prosperity and peace. This dichotomy between the received wisdom and the popular legend remained intact into the 20th Century, until the collapse of the gold standard and the deflation of the Great Depression prompted new thought on the role of money.

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by Akim Reinhardt

I first met Alfred nine years ago, shortly after moving into my current home. I was brand new to the neighborhood and had only been there a week when Baltimore was blanketed with a fresh coat of snow eight inches deep. Around here, that’s well more than enough to shutter schools and keep most people out of work.

I was barely awake, walking around the livingroom in jeans with no shirt or socks when I heard a tremendous rumble and thump outside the window. My primal, territorial instincts took over. The rage began to well up inside me as I prepared to defend my new holding, even if it was a rental. Who dare invade my domain!

I peeled back the curtain to see kids roaming through the streets, engaged in a massive snow ball fight free-for-all. “Alright, Reinhardt,” I said to myself quietly, “you’re only thirty-five. Don’t become a grumpy old man just yet.”

Children of all ages were streaming everywhere. A rather large one had come cascading over a short wall and onto my porch, then onto yet another, clumsily flopping across the connected rowhomes, and thereby creating the most immediate ruckus.

I got on some clothes, went outside, and started firing snowy projectiles. Sensing the opportunity to act out every kid’s fantasy by safely attacking an adult with impunity, the juvenile chaos coalesced into a children’s army. I held them off for a while, relying on a rapid fire release and some bear-like growling. But in the end their numbers were too large. They drove me back into my yard and up the stairs to my rear porch. In the end, it was all I could do to close the latch to the back gate as a fusillade misshapen snowballs reigned down upon me.

All in all, it had been a successful introduction to the neighborhood.

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I'd like to have my own Super PAC
That on my behalf could attack
Of course any sign of collusion
Would be just an illusion
I wouldn't tell them how to act

I know that no contact's allowed
But what's the harm if I just say out loud
“It would so make my day
If your ads were to say
That only I stand out in the crowd”

Oh, the money you'll all want to raise
To make sure you can heap me with praise
And will you please read my mind
Where you'll happen to find
The names of those I'd like to faze

The PAC's name's no concern of mine
Whatever you choose will be fine
But if I had a voice
And was given a choice
I might suggest “Sarah's Divine!”

But of course, it's all up to you
My friends won't be on your crew
We won't speak and won't meet
I'll be just shocked when you tweet
Some of the slander and lies that you'll spew

So I guess that what I need right now
Is to find someone rich I can wow
I mean, really rich
Then I'll make my pitch
But all connivance I'll disavow