Neurological Correlates

Dr. Levine, a psychologist,  posits that the entire country is like a battered spouse: worn down, fearful, and immune to further bad news. My view:  Very apt analogy.

Videos and commentary below (via Maxkeiser.com):

What exactly does the US government invest in? It’s a secret.

Dark pools, insurance company claims ratios, flash and HFT,  unregulated derivatives,  Chinese economy, oil reserves? Secret, secret, secret.

It’s like the abusive husband who confiscates the wife’s paycheck for his separate secret “Vegas” account.

You get the point:  if there weren’t abuse, there wouldn’t be any need for the secrecy.

And like abused women who don’t go to the police for fear of disbelief, further retaliation, and corrupt law enforcement — whistle blowers only come forward with heroics (see, Enron and Madoff, for example).   Same with the general public — no money, no leverage to vote out elected leaders.

Disappointingly, even blogosphere threats,  i.e.,  “getting primaried” (that is, “if you aren’t a good {democrat, republican} we’ll fund a challenger in the primaries and you’ll lose your seat” ) are empty ones.  Dr. Robert Boatright of Clark University’s Poly-sci department collected some data from recent jurisdictions where incumbents were “primaried.”  Incumbents don’t lose their seats; the threat is an empty one.

No rule of law, no punishment, no possible way to stop bad guys — there is simply  bankslaughter.

Stuck with the current system of privatizing gains and socializing losses with no way to change and no way out,  no wonder the nation is traumatized.

Dr. Levine says the nation will probably buckle under the collapse of the system, but, I have, somewhat unbelievably, an optimistic view. A darkly optimistic view.  The end result: US exports bankers.

If you view the economy as an ecosystem — like one for, say, sea monkeys — there is feedstock and waste removal.

The feedstock –money — comes from somewhere — institutions, pension plans, mutual funds, corporate short term accounts. Big whopping piles of money. The sea monkey bankers grow big and strong and say, “me want more feed”.

And there is waste – toxic assets. Synthetic securitized exponential who knows what, disgusting to look at and impossible to unscramble.

Financial sea monkeys expel the waste to the taxpayers.

When the dynamic equilibrium gets out of whack, the sea monkeys will starve or perish in their own waste, Malthusian style. . .unless . . . they leave this ecosystem and set up a new one.

Which is: You guessed it. China. (Or, the East in general).

I’m optimistic about this, actually.  China’s main self interest is in keeping the peace — so its billions of citizens don’t have another revolution.  Totalitarian regime may be the way to have productive banking. Despite the corruption, at some point, China has criminal enforcement of white collar crime.  Exploding municipal finance won’t go well there. Party leaders are bought, but that doesn’t mean they’re paid for.

It is interesting that both the head of the World Bank and the US State Department Economics appointees are ex-Goldman Sachs.

And, the next big thing in China?

Setting up social safety networks, like social security.

And who will manage Chinese social security? Hm.