Remora
Limited Inc is no fan of either John Rawls or Ronald Dworkin. Philosophers who produce casuistry which reads like memos from Kafka's Castle, are, in our eyes, under grave suspicion of boring without a licence. Unless they are doing something completely original -- you know, like exploring the ontology of holes. But in the conservative City Journal there is an attack on the dull duo that is below par even by the debased standards of the Manhattan Institute (the foundation, darling, that puts out the journal). In an article by John Kekes, we are forced, at a certain point, to feel some lukewarm solidarity with the pair. Dull they may be, but they don't deserved to be sniped at by a moron. Not that Kekes is a moron, of course -- for all we know he might put on his pants one leg at a time like anybody else. But judging by the quality of this article, he probably tries to put them on three legs at a time, and trips into the dresser in the process.
Here's how Kekes makes his overall point in 1 and one half astonishing grafs:
"After all, a just government ought to treat everyone with equal consideration, and, they assert, doing so requires legislation aimed at the equalization of property. This economic egalitarianism goes far beyond the uncontroversial claim that people should have equal political and legal rights. Economic egalitarianism requires depriving the 86 percent of citizens who live above the poverty level of a substantial portion of their legally owned property in order to give it to the 14 percent who live below it.
The impassioned egalitarian rhetoric that asserts this supposed obligation cows many people into acquiescence. But no such obligation exists, and the appeal to it is absurd, because it requires the equalization of the property of rapists and their victims, welfare cheats and taxpayers, spendthrifts and savers. No reasonable person can believe that we are obliged to treat the moral and immoral, the prudent and imprudent, the law-abiding and the criminal with equal consideration. While we may have an obligation to help those who are poor through no fault of their own, it is absurd to suppose that if, as a result of bad choices, people find themselves below the poverty level, then it becomes the obligation of the government to help them by confiscating a considerable portion of the property of everyone else."
Now, anybody who has read Rawls justification of welfare, which is about minimum standards of bien-etre, knows that Kekes is not just caricaturing Rawls, but living on another planet. Only such a lunar habitation would explain finding "impassioned egalitarian rhetoric' in A theory of Justice. It is as impassioned as an accountant's christmas card -- ask any poor philosophy student. Even his percentages seem screwy. Why would 86 percent of citizens above the poverty level have to be deprived of a "substantial portion of their property" in order to equalize the amount held by the 14 percent below it -- that would only be true if the 14 percent below it were enormously below it, and if the 86 percent, who were equidistant from the 14 percent, held an amount of wealth that was, coincidentally, both substantially part of their collected wealth, and equal to the sum which the 14 percent would have to possess in order to be equal to the 86 percent. Of course, that is absurd to begin with. We could repair Kekes argument slightly if we were given corollary figures to decide this issue (as in some sum for the total wealth in the system, some sums for how that wealth is really divided up, etc) but what is the point? Since Kekes ignores the fact that the 86 percent and the 14 percent cover, inter alia, enormous internal differences in wealth, what we have, here, is a veritable aria of nonsense. Limited Inc only hopes that Kekes limits the intellectual damage he does to the confines of academia, and doesn't seek a job in the world of, say, business; although if he must, we'd recommend the accounts received department at Enron -- he'd be a perfect Enron man, where the motto is: math illiteracy no bar to advancement! Of course, this is besides the main point, which is that there is nothing in Rawls or Dworkin that envisions that kind of transfer of wealth. It is one thing to make a case for a reductio ad absurdam - that, in other words, the logic Rawls or Dworkin is using would lead us down the old slippery slope to Kekes conclusion; it is another thing to start with ad absurdam and freefall like a mad parachutist. Kekes, though, is only compounding an unfortunately common error among the "impassioned" rhetoricians of the right. We are reminded of Plato's early dialogue, Euthydemus, in which Socrates engages with two brothers, Euthydemos and Dionysodorus, who've just learned "philosophy" - that is, they've learned how to play with the connotations and denotations of words. Actually, in the almost Beckettian comedy of this dialogue, we find Kekes' spiritual lumpen ancestors -- people who simply can't think. An unfortunate handicap for a thinker. When Euthydemus proves that not only is he not Dionysodorus' brother, but that Socrates has no father, we come upon an uncannily familiar logic, one applied everyday by the George Wills, the John Kekes, and the Weekly Standards of this world:
What, replied Dionysodorus in a moment; am I the brother of
Euthydemus?
Thereupon I said, Please not to interrupt, my good friend, or
prevent Euthydemus from proving to me that I know the good to be
unjust; such a lesson you might at least allow me to learn.
You are running away, Socrates, said Dionysodorus, and refusing to
answer.
No wonder, I said, for I am not a match for one of you, and a
fortiori I must run away from two. I am no Heracles; and even Heracles
could not fight against the Hydra, who was a she-Sophist, and had
the wit to shoot up many new heads when one of them was cut off;
especially when he saw a second monster of a sea-crab, who was also
a Sophist, and appeared to have newly arrived from a sea-voyage,
bearing down upon him from the left, opening his mouth and biting.
When the monster was growing troublesome he called Iolaus, his nephew,
to his help, who ably succoured him; but if my Iolaus, who is my
brother Patrocles [the statuary], were to come, he would only make a
bad business worse.
And now that you have delivered yourself of this strain, said
Dionysodorus, will you inform me whether Iolaus was the nephew of
Heracles any more than he is yours?
I suppose that I had best answer you, Dionysodorus, I said, for
you will insist on asking that I pretty well know-out of envy, in
order to prevent me from learning the wisdom of Euthydemus.
Then answer me, he said.
Well then, I said, I can only reply that Iolaus was not my nephew at
all, but the nephew of Heracles; and his father was not my brother
Patrocles, but Iphicles, who has a name rather like his, and was the
brother of Heracles.
And is Patrocles, he said, your brother?
Yes, I said, he is my half-brother, the son of my mother, but not of
my father.
Then he is and is not your brother.
Not by the same father, my good man, I said, for Chaeredemus was his
father, and mine was Sophroniscus.
And was Sophroniscus a father, and Chaeredemus also?
Yes, I said; the former was my father, and the latter his.
Then, he said, Chaeredemus is not a father.
He is not my father, I said.
But can a father be other than a father? or are you the same as a
stone?
I certainly do not think that I am a stone, I said, though I am
afraid that you may prove me to be one.
Are you not other than a stone?
I am.
And being other than a stone, you are not a stone; and being other
than gold, you are not gold?
Very true.
And so Chaeredemus, he said, being other than a father, is not a
father?
I suppose that he is not a father, I replied.
For if, said Euthydemus, taking up the argument, Chaeredemus is a
father, then Sophroniscus, being other than a father, is not a father;
and you, Socrates, are without a father."
Ah, I can only imagine the young Kekes nodding vigorously to this, and noting in the margin: Socrat. has no father! Interesting!!!! Must note - perhaps a virgin b.?
Tuesday, November 27, 2001
Monday, November 26, 2001
Death tolls. Why does Limited Inc circle this rebarbative topic again and again, like the Biblical canine slinking back to its biblical dejecta? Simple answer, honey, is: it is history � yours and mine, for ever and ever, world without end, amen.
As I said in yesterday�s post, the historians of the Soviet Empire (file under evil) have a disconcerting habit of flaming each other about death toll numbers. How many died in the de-kulakization of the early 30s? Robert Conquests figures are holy writ to the National Review crowd, while the Nation crowd views them as insufferable puffery, fixing the death accounting books. (The same ideological divide, but a differently distributed disposition to skepticism, presides over the number of Sanction dead in Iraq.) The vested interest in increasing death toll numbers is in contrast to the usual political positions taken by the people who brandish the numbers. The larger the number, the greater the ideological difference between the accuser and the particular criminal regime. The deconstructionist in me can�t resist pointing to a sort of hostile mimicry instituted by this habit. It is as if, in order to memorialize a mass killing, the eulogists need to kill a greater number, if only figuratively. The same economic motive operates among the killers, as we know from records of the GPU and the SS. The greater the number of victims, the greater the productivity.
I�ve submitted a proposal to write about this for a more remunerative publication, so I am not going to get into it here � no use throwing pearls before swine (not you, gentle reader � Limited Inc is speaking figuratively). But the war of numbers among the historians is reminiscent of other number wars � for instance, in the estimation of demonstration crowds. I�m tempted to allude, extensively, to the master thinker of crowd symbols, Elias Canetti. But in perusing his book, Crowds and Power, I came upon a section on the increasing crowd, but not the increasing crowd of the dead. That the dead don�t fuck is one of the laws of a nature, even among the myths. But that they can increase � that we are prepared to increase them statistically, if not by the discovery of individual cases � is a modern phenomenon that must have its roots in one of Canetti�s crowd symbols.
As I said in yesterday�s post, the historians of the Soviet Empire (file under evil) have a disconcerting habit of flaming each other about death toll numbers. How many died in the de-kulakization of the early 30s? Robert Conquests figures are holy writ to the National Review crowd, while the Nation crowd views them as insufferable puffery, fixing the death accounting books. (The same ideological divide, but a differently distributed disposition to skepticism, presides over the number of Sanction dead in Iraq.) The vested interest in increasing death toll numbers is in contrast to the usual political positions taken by the people who brandish the numbers. The larger the number, the greater the ideological difference between the accuser and the particular criminal regime. The deconstructionist in me can�t resist pointing to a sort of hostile mimicry instituted by this habit. It is as if, in order to memorialize a mass killing, the eulogists need to kill a greater number, if only figuratively. The same economic motive operates among the killers, as we know from records of the GPU and the SS. The greater the number of victims, the greater the productivity.
I�ve submitted a proposal to write about this for a more remunerative publication, so I am not going to get into it here � no use throwing pearls before swine (not you, gentle reader � Limited Inc is speaking figuratively). But the war of numbers among the historians is reminiscent of other number wars � for instance, in the estimation of demonstration crowds. I�m tempted to allude, extensively, to the master thinker of crowd symbols, Elias Canetti. But in perusing his book, Crowds and Power, I came upon a section on the increasing crowd, but not the increasing crowd of the dead. That the dead don�t fuck is one of the laws of a nature, even among the myths. But that they can increase � that we are prepared to increase them statistically, if not by the discovery of individual cases � is a modern phenomenon that must have its roots in one of Canetti�s crowd symbols.
Sunday, November 25, 2001
Dope
Limited inc is quite familiar (as, I assume, hypocrite lecteur, you are too) with mass murder as a background phenomenon. After all, we all grew up in a world where the weaponry stored underground in Arkansas and the Ukraine would be more than sufficient to wipe the whole breed of Yahoos from the earth; along, probably, with many other breeds -- chihuahas, siamese cats, etc. This knowledge was, properly, bystander knowledge -- to use Karl Krauss' distinction between Dasein and Dabei-sein. The era, in other words, of Black magic.
But Limited Inc has not had the honor of personal, sensual acquaintance with mass murder. No rifle butt aimed for the lower back propelled us into a pit at Babi Yar; no NKVD boot landed on our ms in a cramped Moscow apartment. We never had to swallow our teeth, or our feces, in a basement in the Lubyanka prison, as did Meyerhold, the great theater director, before he confessed; never had to confront our formerly friendly neighbors in some Rwanda ville, neighbors armed with machetes and ready for a go with the daughter, wife, and even, shockingly, our own most precious carcass. We have the privilege of not even having to care too much about these things, and of course we exercise it, in the same way we turn switches on or off and buy our French roast coffee beans at Whole Foods. No big deal.
Which brings us, by an intellectual detour, to Aileen Kelly's essay on Stalinism, murder and time in the current NYRB.
Kelly is part of an often abused scholarly tribe, along with Sheila Fitzgerald and a few others, who study Stalinism as a phenomenon apart from what Koestler and Robert Conquest said about it. I'm going to get to that in my next post. But I wanted to share two grafs that will point you to this article.
"Brooks cites one revealing anecdote on what it was like for the ordinary Soviet citizen to live in a utopian temporality. The German Communist Wolfgang Leonhard, who grew up in Moscow, describes his confusion when in 1935 he and his mother sought to replace their outdated 1924 map of Moscow and discovered that the new map contained all the improvements destined to be completed by 1945: "We used to take both town plans with us on our walks from then on�one showing what Moscow had looked like ten years before, and the other showing what it would look like ten years hence." As Brooks says, "what had vanished or, more exactly, become compressed between two dream worlds was the present."
And this irresistible graf:
"We can still only speculate on Stalin's motives and the wider pressures that led to the orgy of violence. Yet Lewis Siegelbaum's analysis of letters from ordinary citizens shows that very many did not question the policy of repression itself, ascribing "excesses" in this respect only to particular individuals: a common suspicion was that "enemies of the people" had wormed their way into the NKVD and, by arresting loyal Communists, were attempting to undermine Soviet power. Substantial numbers of the Party elite seem to have seen the Terror as a necessary defensive operation. Those who (we may assume) did not, such as the veteran Bolshevik Nikolai Bukharin, were forced to use the official rhetoric. In a letter to Stalin which he hoped would save him from execution after his trial in 1938, he protests his innocence of the charges against him, but writes that "there is something great and bold about the political idea of a general purge...[which] encompasses 1) the guilty; 2) persons under suspicion; and 3) persons potentially under suspicion.""
Limited inc is quite familiar (as, I assume, hypocrite lecteur, you are too) with mass murder as a background phenomenon. After all, we all grew up in a world where the weaponry stored underground in Arkansas and the Ukraine would be more than sufficient to wipe the whole breed of Yahoos from the earth; along, probably, with many other breeds -- chihuahas, siamese cats, etc. This knowledge was, properly, bystander knowledge -- to use Karl Krauss' distinction between Dasein and Dabei-sein. The era, in other words, of Black magic.
But Limited Inc has not had the honor of personal, sensual acquaintance with mass murder. No rifle butt aimed for the lower back propelled us into a pit at Babi Yar; no NKVD boot landed on our ms in a cramped Moscow apartment. We never had to swallow our teeth, or our feces, in a basement in the Lubyanka prison, as did Meyerhold, the great theater director, before he confessed; never had to confront our formerly friendly neighbors in some Rwanda ville, neighbors armed with machetes and ready for a go with the daughter, wife, and even, shockingly, our own most precious carcass. We have the privilege of not even having to care too much about these things, and of course we exercise it, in the same way we turn switches on or off and buy our French roast coffee beans at Whole Foods. No big deal.
Which brings us, by an intellectual detour, to Aileen Kelly's essay on Stalinism, murder and time in the current NYRB.
Kelly is part of an often abused scholarly tribe, along with Sheila Fitzgerald and a few others, who study Stalinism as a phenomenon apart from what Koestler and Robert Conquest said about it. I'm going to get to that in my next post. But I wanted to share two grafs that will point you to this article.
"Brooks cites one revealing anecdote on what it was like for the ordinary Soviet citizen to live in a utopian temporality. The German Communist Wolfgang Leonhard, who grew up in Moscow, describes his confusion when in 1935 he and his mother sought to replace their outdated 1924 map of Moscow and discovered that the new map contained all the improvements destined to be completed by 1945: "We used to take both town plans with us on our walks from then on�one showing what Moscow had looked like ten years before, and the other showing what it would look like ten years hence." As Brooks says, "what had vanished or, more exactly, become compressed between two dream worlds was the present."
And this irresistible graf:
"We can still only speculate on Stalin's motives and the wider pressures that led to the orgy of violence. Yet Lewis Siegelbaum's analysis of letters from ordinary citizens shows that very many did not question the policy of repression itself, ascribing "excesses" in this respect only to particular individuals: a common suspicion was that "enemies of the people" had wormed their way into the NKVD and, by arresting loyal Communists, were attempting to undermine Soviet power. Substantial numbers of the Party elite seem to have seen the Terror as a necessary defensive operation. Those who (we may assume) did not, such as the veteran Bolshevik Nikolai Bukharin, were forced to use the official rhetoric. In a letter to Stalin which he hoped would save him from execution after his trial in 1938, he protests his innocence of the charges against him, but writes that "there is something great and bold about the political idea of a general purge...[which] encompasses 1) the guilty; 2) persons under suspicion; and 3) persons potentially under suspicion.""
Wednesday, November 21, 2001
Remora
Steven Glover in the Spectator discusses what we didn't know and when we didn't know it in Afghanistan. Points for dispassion -- the current fashion in punditry seems to require that the writer bark, whine and growl on the page, and finally pee on his foes, all the better to show you his convictions. This has arisen from the point-counterpoint tv format for mixing together ideas and viewer interest, I suspect. Glover remarks that the press almost universally gave the Northern Alliance no chance, and credited the Taliban with a great, mystifying resilience. Both of those positions have been overturned by circumstances. He also claims that the bombing was much more efficient than the anti-war side gave it credit for being.
The latter is the only part of his article with which I have a problem. To assess how good the bombing is, one would have to get through the great blank thrown up by the American military. Actually, one would also have to have the desire to get through that great blank; given the servility of the press corps towards all things military since 9/11, this would be to expect supererogation on the part of some journalist, and honesty in his editor, which is the kind of fortunate conjunction we just haven't seen since, well, the high 80s. Those who did press into the country carried back pictures of kids and old people wounded by high explosives dropped continuously by American airplanes. Perhaps those high explosives did some military good in the beginning. And it might be the damage so inflicted on the Taliban was irreparable. One thing we can surely say about the Taliban is that it has no depth. Or rather, its resource was Pakistan. Cut off from Pakistan, it crumbled. Did the bombing hasten the collapse? If we rely on previous situations -- if we take Kosovo as a guide -- we'd have to say that bombing without let up a civilian population that is closely integrated with a military organization can lead to a military breakdown. But there might be a question of costs yet to arise -- because that kind of destruction can leave in its wake consequences that will bite our ass. There are advantages to processing territory by way of traditional soldiery that aren't considered by the TAC people in the Pentagon. One is that a population is more likely to consider its opponents honorable if they can see them.
In any case, it is worth pondering Glover's last graf:
"My feeling is that almost all of us �reporters, pundits, academics and politicians � know much less about Afghanistan than we think we do, and perhaps less than we give the impression of doing. Let us be frank: most of us had never heard of Mazar-i-Sharif until a few weeks ago, and yet we have been pontificating about its strategic significance as though we were familiar since childhood with the curve of its hills. In the absence of detailed knowledge, we have fallen back on theories and fragments of history about the Northern Alliance recycled by journalists who probably do not know what they are talking about. In short, we have been peering through a glass pretty darkly. The lesson I will draw from the rout of the Taleban is that none of us has much idea what is going to happen, and that the Sun�s celebrations may therefore possibly be premature."
Steven Glover in the Spectator discusses what we didn't know and when we didn't know it in Afghanistan. Points for dispassion -- the current fashion in punditry seems to require that the writer bark, whine and growl on the page, and finally pee on his foes, all the better to show you his convictions. This has arisen from the point-counterpoint tv format for mixing together ideas and viewer interest, I suspect. Glover remarks that the press almost universally gave the Northern Alliance no chance, and credited the Taliban with a great, mystifying resilience. Both of those positions have been overturned by circumstances. He also claims that the bombing was much more efficient than the anti-war side gave it credit for being.
The latter is the only part of his article with which I have a problem. To assess how good the bombing is, one would have to get through the great blank thrown up by the American military. Actually, one would also have to have the desire to get through that great blank; given the servility of the press corps towards all things military since 9/11, this would be to expect supererogation on the part of some journalist, and honesty in his editor, which is the kind of fortunate conjunction we just haven't seen since, well, the high 80s. Those who did press into the country carried back pictures of kids and old people wounded by high explosives dropped continuously by American airplanes. Perhaps those high explosives did some military good in the beginning. And it might be the damage so inflicted on the Taliban was irreparable. One thing we can surely say about the Taliban is that it has no depth. Or rather, its resource was Pakistan. Cut off from Pakistan, it crumbled. Did the bombing hasten the collapse? If we rely on previous situations -- if we take Kosovo as a guide -- we'd have to say that bombing without let up a civilian population that is closely integrated with a military organization can lead to a military breakdown. But there might be a question of costs yet to arise -- because that kind of destruction can leave in its wake consequences that will bite our ass. There are advantages to processing territory by way of traditional soldiery that aren't considered by the TAC people in the Pentagon. One is that a population is more likely to consider its opponents honorable if they can see them.
In any case, it is worth pondering Glover's last graf:
"My feeling is that almost all of us �reporters, pundits, academics and politicians � know much less about Afghanistan than we think we do, and perhaps less than we give the impression of doing. Let us be frank: most of us had never heard of Mazar-i-Sharif until a few weeks ago, and yet we have been pontificating about its strategic significance as though we were familiar since childhood with the curve of its hills. In the absence of detailed knowledge, we have fallen back on theories and fragments of history about the Northern Alliance recycled by journalists who probably do not know what they are talking about. In short, we have been peering through a glass pretty darkly. The lesson I will draw from the rout of the Taleban is that none of us has much idea what is going to happen, and that the Sun�s celebrations may therefore possibly be premature."
Dope.
Limited Inc has passed the thousand hit mark. We probably passed it a while ago -- we only put a site meter on this page a month after we started it. Of course, the site meter also reads our own visits to the page, so subtract that from the total, add the unknowns that might have visited here, and we figure the sum is close to a thousand. If we had money, I guess we'd have the more sophisticated meter tool that would discount our visits, and make useful statistical chop suey for our marketing department, and suggest fabulous ways to promote ourselves. And would even, in its spare time, write these damn posts.
Unfortunately, as noted in a previous post, we are going through a bit of a famine. In terms of money. In terms of lack of money. In terms of not being paid for our work. In terms of thinking that maybe, all the checks that should be winging our way crossed with anthrax soiled mail, and have been thrown away. So we can't afford another site meter, or even a pair of running shoes, or a steak dinner, or a bottle of tequilla, at the present moment.
Such is fate. Happy Thanksgiving, everybody in the house!
Limited Inc has passed the thousand hit mark. We probably passed it a while ago -- we only put a site meter on this page a month after we started it. Of course, the site meter also reads our own visits to the page, so subtract that from the total, add the unknowns that might have visited here, and we figure the sum is close to a thousand. If we had money, I guess we'd have the more sophisticated meter tool that would discount our visits, and make useful statistical chop suey for our marketing department, and suggest fabulous ways to promote ourselves. And would even, in its spare time, write these damn posts.
Unfortunately, as noted in a previous post, we are going through a bit of a famine. In terms of money. In terms of lack of money. In terms of not being paid for our work. In terms of thinking that maybe, all the checks that should be winging our way crossed with anthrax soiled mail, and have been thrown away. So we can't afford another site meter, or even a pair of running shoes, or a steak dinner, or a bottle of tequilla, at the present moment.
Such is fate. Happy Thanksgiving, everybody in the house!
Tuesday, November 20, 2001
Remora
Gretchen Morgenstern's column this morning begins with the impressive run up in the stock market. She notes, as Rob Walker at Slate did on the 15th, that the market is up 20% over its post 9/11 low.
Here's a quote that is at the heart of her article:
"James Paulsen, chief investment officer of Wells Capital Management in Minneapolis, is of two minds on the recent rally. "Part of me says, how often does an equity investor have everybody from the Bank of Japan, the United States Congress, the European Central Bank and the Fed working day and night to get equities up?" he asked. "That's a hugely bullish thing to bet against. I don't disagree we're going to get a bounce and the recession will end, but I wonder how strong the recovery will be."
Mr. Paulsen is particularly concerned about the financial position of American consumers, many of whom have binged on borrowing and now face unemployment. Even though mortgage rates fell a few weeks ago, they have backed up again, reducing the potential savings from refinancings for many consumers."
Walker's piece mulls over a commonplace of Wall Street. Walker is too smart a fella to fall for it, but he does put the conventional wisdom in a nutshell (and you thought only oak trees and other vegetables could put things in nutshells, right? well, journalists put things in nutshells for Limited Inc to crack, with its big parrot like beak. So, don't ask any more tedious questions, or I'll throw some more cliches at you):
"One school of thought has long held that the stock market is not quite the reactive thing we often imagine it to be, but rather that it anticipates events. The crash of 1929, for instance, did not cause the Great Depression, but rather predicted it. One recent articulation of these ideas was the book The Message of the Markets, by CNBC anchor Ron Insana, published last year. One of the anecdotes in that book is Insana's recap of the market's reaction to the Jan. 17, 1991, launch of Operation Desert Storm. The Dow rose 105 points, and "the greatest bull market to ever take place on Wall Street got its start on the day the Gulf War began." Insana's point, and the theme of the book, is that while many experts at the time were predicting all manner of doom and gloom, the collective wisdom of the markets simply "knew better" and knew it sooner."
The idea that the stock market encodes information, and that that information is somehow predictive, is one of those nice ideological sleight of hands that tries to make a silk purse out of a sow belly future. In the last week, Limited Inc has been reading a history of the market, Toward Rational Exuberance, by Mark Smith. We found the parts about the early twentieth century pretty engrossing. Just as 9/11 seemed to signal the beginning of world disorder, and was followed by a equities suicide leap, the assassination of Archduke Ferdinand was followed by a market collapse. But in 1915 and 1916, American companies discovered the wonders of modern warfare. The money that flowed into American coffers was magical. If this happened today, what you would see is a bigger spread between price and earnings. What happened in 1916 was just the reverse. The ratio of the price of stock to the amount of the dividend went down, eventually hitting a historic low of 4 to 1 in 1916. Why? Well, this is one of the mysteries, kids. If we put on our explorer hat (a pith helmet, actually. We always write these posts accoutered - or would one say haberdashed? - in a pith helmet, but otherwise naked), we would have to venture into the psychology of expectation. In those days, those far off days, stocks were considered, with reason, to be a much higher risk than bonds. So the dividend on stocks had to be serious. So from the earnings end, that ate at the P/E ratio. At the stock end, there was the competition with bonds, which to the generation of 1910 seemed a much more secure financial instrument. This has reversed in our day, starting in the late fifties. That something like this can reverse is itself curious -- how does the horizon of expectation, which is a composite of different expectations, suddenly transform itself? And how are those expectations encoded into the price level of individual stocks? In spite of the Efficient Market Hypothesis people, it is hard to see where the market is getting its 'extra' information from. We aren't going to offer our own theory on this - we have delusions of grandeur around here, but we aren't crazy. But it does seem that traders, right now, are reading each others price levels much more than they are reading the extra-market indicators. In literature, this is referred to as post-modernism. In finance, it is the royal highway to a bust. Which makes sense - pomo is what happened when modernism, which tried to refer to everything in the world, all of history, the cavemen and the Minoans as well as aviation daredevils and occult fads, found that it couldn't. It couldn't cohere. So our advice to traders is: read the last cantos of Ezra Pound, those jagged fragments, and beware, beware.
Gretchen Morgenstern's column this morning begins with the impressive run up in the stock market. She notes, as Rob Walker at Slate did on the 15th, that the market is up 20% over its post 9/11 low.
Here's a quote that is at the heart of her article:
"James Paulsen, chief investment officer of Wells Capital Management in Minneapolis, is of two minds on the recent rally. "Part of me says, how often does an equity investor have everybody from the Bank of Japan, the United States Congress, the European Central Bank and the Fed working day and night to get equities up?" he asked. "That's a hugely bullish thing to bet against. I don't disagree we're going to get a bounce and the recession will end, but I wonder how strong the recovery will be."
Mr. Paulsen is particularly concerned about the financial position of American consumers, many of whom have binged on borrowing and now face unemployment. Even though mortgage rates fell a few weeks ago, they have backed up again, reducing the potential savings from refinancings for many consumers."
Walker's piece mulls over a commonplace of Wall Street. Walker is too smart a fella to fall for it, but he does put the conventional wisdom in a nutshell (and you thought only oak trees and other vegetables could put things in nutshells, right? well, journalists put things in nutshells for Limited Inc to crack, with its big parrot like beak. So, don't ask any more tedious questions, or I'll throw some more cliches at you):
"One school of thought has long held that the stock market is not quite the reactive thing we often imagine it to be, but rather that it anticipates events. The crash of 1929, for instance, did not cause the Great Depression, but rather predicted it. One recent articulation of these ideas was the book The Message of the Markets, by CNBC anchor Ron Insana, published last year. One of the anecdotes in that book is Insana's recap of the market's reaction to the Jan. 17, 1991, launch of Operation Desert Storm. The Dow rose 105 points, and "the greatest bull market to ever take place on Wall Street got its start on the day the Gulf War began." Insana's point, and the theme of the book, is that while many experts at the time were predicting all manner of doom and gloom, the collective wisdom of the markets simply "knew better" and knew it sooner."
The idea that the stock market encodes information, and that that information is somehow predictive, is one of those nice ideological sleight of hands that tries to make a silk purse out of a sow belly future. In the last week, Limited Inc has been reading a history of the market, Toward Rational Exuberance, by Mark Smith. We found the parts about the early twentieth century pretty engrossing. Just as 9/11 seemed to signal the beginning of world disorder, and was followed by a equities suicide leap, the assassination of Archduke Ferdinand was followed by a market collapse. But in 1915 and 1916, American companies discovered the wonders of modern warfare. The money that flowed into American coffers was magical. If this happened today, what you would see is a bigger spread between price and earnings. What happened in 1916 was just the reverse. The ratio of the price of stock to the amount of the dividend went down, eventually hitting a historic low of 4 to 1 in 1916. Why? Well, this is one of the mysteries, kids. If we put on our explorer hat (a pith helmet, actually. We always write these posts accoutered - or would one say haberdashed? - in a pith helmet, but otherwise naked), we would have to venture into the psychology of expectation. In those days, those far off days, stocks were considered, with reason, to be a much higher risk than bonds. So the dividend on stocks had to be serious. So from the earnings end, that ate at the P/E ratio. At the stock end, there was the competition with bonds, which to the generation of 1910 seemed a much more secure financial instrument. This has reversed in our day, starting in the late fifties. That something like this can reverse is itself curious -- how does the horizon of expectation, which is a composite of different expectations, suddenly transform itself? And how are those expectations encoded into the price level of individual stocks? In spite of the Efficient Market Hypothesis people, it is hard to see where the market is getting its 'extra' information from. We aren't going to offer our own theory on this - we have delusions of grandeur around here, but we aren't crazy. But it does seem that traders, right now, are reading each others price levels much more than they are reading the extra-market indicators. In literature, this is referred to as post-modernism. In finance, it is the royal highway to a bust. Which makes sense - pomo is what happened when modernism, which tried to refer to everything in the world, all of history, the cavemen and the Minoans as well as aviation daredevils and occult fads, found that it couldn't. It couldn't cohere. So our advice to traders is: read the last cantos of Ezra Pound, those jagged fragments, and beware, beware.
Sunday, November 18, 2001
Remora
The question of the day, reader, is what ever happened to Maureen Dowd.
The Maureen Dowd of the ancien regime, circa 1999, was, to use a reviewer's phrase (one of those phrases that emerge, in the last minutes before the review has to get off in the mail, from the lumber room of previous blurbs, blurbs which the reviewer has vowed never, ever to use, which the reviewer has said to himelf, in the depths of the reviewer night, the midnight hour, the hour of ghosts and conscience, at least I have never written a word that could be mistaken for something written by Roger Ebert -- Limited Inc has been there, child) compulsively readable. Or at least her compulsions were our compulsions. Dowd had some kind of x-ray power she could turn on the Clintons, with all their bumptious sex and it takes a village sweet talk. There's a kid's game called Battleship -- it is still being sold out there, I believe, in the mall universe into which Limited Inc so rarely ventures. In the game, both players attach little plastic ships to pegs punched in a square space that is divided into a numbered and lettered grid. The little plastic ships are of various sizes, and in the ships there are holes. The number of the holes gives you the practical value of the ship. Above that square there is a screen, which reproduces the square space. That screen is blank, and represents your opponent's space: that square into which he has plugged his plastic ships. A hostile tabula rasa, except of course, for your opponent, it isn't a tabula rasa -- his ships populate it, his tabula is occupied. Each player has little plastic pegs, which count as torpedos. A Player "shoots" at another one by announcing a position - say A6. If the other player's vessel is not on A6, it is a miss, but if the plastic vessel is anchored there, you have to say, hit. Hit is the ritualistic word. Every torpedo is plugged into the blank screen, and so gradually a pattern emerges. Even the misses, then, are important, because you begin to see gaps, you begin to see possibilities, shapes emerge -- the battleship, the cruiser, the submarine. A version of that game is also played, to a large extent, by the press corps in D.C., who are always aiming at a grid that they can't see until they hit something. That grid is the government.
Dowd's hits were extraordinary.
Lately, Dowd's hit percentage is way down. Her column today is bottom of the barrel. Here's how it begins:
"It is hard to fathom how a part of the world that produced Cleopatra � who perfumed the sails of her boat so men would know she was coming and ruled with elegant authority, signing one tax decree "Make it happen" � could two millenniums later produce societies where women are swaddled breeders under house arrest"
Say what? "Don't know much about history/don't know much about geography..." That beach boy's song, our secret national anthem, seems apposite here, where Egypt and Afghanistan are jumbled up, and we are supposed to be surprised that, in the space of a mere two thousand years, cultures change. Obviously, Dowd wants her Cleopatra reference desperately enough that she is willing to go to any lengths to get it. That she could have used, oh, I don't know, Benazir Bhutto as a current reference seems to have escaped her, partly because that would tangle up our cultural stereotypes -- after all, that Bhutto was the leader (a very bad leader) of a Muslim nation contrasts in an odd way with the US's resolutely male line of presidents.
Obviously, Dowd didn't flunk out of her high school history course, even if today's column might make you wonder. Her problem is that she doesn't want to 'hit' - she is giving a pass to Bushypoo's reign. This is a game that depends on hits, however. Although inertia on the NYT op ed page can get you a career a la William Safire, it is a shame to see a woman who can file her teeth with the best of em allow herself to be practically veiled. Tear that veil off, Maureen. Plug in. Try G8, or E7. Get back in the game!.
The question of the day, reader, is what ever happened to Maureen Dowd.
The Maureen Dowd of the ancien regime, circa 1999, was, to use a reviewer's phrase (one of those phrases that emerge, in the last minutes before the review has to get off in the mail, from the lumber room of previous blurbs, blurbs which the reviewer has vowed never, ever to use, which the reviewer has said to himelf, in the depths of the reviewer night, the midnight hour, the hour of ghosts and conscience, at least I have never written a word that could be mistaken for something written by Roger Ebert -- Limited Inc has been there, child) compulsively readable. Or at least her compulsions were our compulsions. Dowd had some kind of x-ray power she could turn on the Clintons, with all their bumptious sex and it takes a village sweet talk. There's a kid's game called Battleship -- it is still being sold out there, I believe, in the mall universe into which Limited Inc so rarely ventures. In the game, both players attach little plastic ships to pegs punched in a square space that is divided into a numbered and lettered grid. The little plastic ships are of various sizes, and in the ships there are holes. The number of the holes gives you the practical value of the ship. Above that square there is a screen, which reproduces the square space. That screen is blank, and represents your opponent's space: that square into which he has plugged his plastic ships. A hostile tabula rasa, except of course, for your opponent, it isn't a tabula rasa -- his ships populate it, his tabula is occupied. Each player has little plastic pegs, which count as torpedos. A Player "shoots" at another one by announcing a position - say A6. If the other player's vessel is not on A6, it is a miss, but if the plastic vessel is anchored there, you have to say, hit. Hit is the ritualistic word. Every torpedo is plugged into the blank screen, and so gradually a pattern emerges. Even the misses, then, are important, because you begin to see gaps, you begin to see possibilities, shapes emerge -- the battleship, the cruiser, the submarine. A version of that game is also played, to a large extent, by the press corps in D.C., who are always aiming at a grid that they can't see until they hit something. That grid is the government.
Dowd's hits were extraordinary.
Lately, Dowd's hit percentage is way down. Her column today is bottom of the barrel. Here's how it begins:
"It is hard to fathom how a part of the world that produced Cleopatra � who perfumed the sails of her boat so men would know she was coming and ruled with elegant authority, signing one tax decree "Make it happen" � could two millenniums later produce societies where women are swaddled breeders under house arrest"
Say what? "Don't know much about history/don't know much about geography..." That beach boy's song, our secret national anthem, seems apposite here, where Egypt and Afghanistan are jumbled up, and we are supposed to be surprised that, in the space of a mere two thousand years, cultures change. Obviously, Dowd wants her Cleopatra reference desperately enough that she is willing to go to any lengths to get it. That she could have used, oh, I don't know, Benazir Bhutto as a current reference seems to have escaped her, partly because that would tangle up our cultural stereotypes -- after all, that Bhutto was the leader (a very bad leader) of a Muslim nation contrasts in an odd way with the US's resolutely male line of presidents.
Obviously, Dowd didn't flunk out of her high school history course, even if today's column might make you wonder. Her problem is that she doesn't want to 'hit' - she is giving a pass to Bushypoo's reign. This is a game that depends on hits, however. Although inertia on the NYT op ed page can get you a career a la William Safire, it is a shame to see a woman who can file her teeth with the best of em allow herself to be practically veiled. Tear that veil off, Maureen. Plug in. Try G8, or E7. Get back in the game!.
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