Quantum Economics

The past couple of weeks have not been pleasant ones.  I have been doing statistics (on the biogeography of waterfowl), and I have been reading about statistics (on the global economic meltdown).  I have been delving broadly, if not deeply:  postmortems in The Atlantic and Wired; an articulate if foamy rant in Rolling Stone; and perhaps most incisively, the “Margaritaville” episode of South Park in which Stan (as Jesus Christ) takes unto himself ther weight of South Park’s sins using only his faith and a Platinum Amex with no spending limit.  (Quite honestly, that ep would have contained more insight than all those other articles combined, even without the chicken-sacrifice scene.)  I have spoken with an investment banker (lucratively retired) who tells me I am right, and argued with a stock broker (nonpracticing) who tells me I am wrong because money is actually the strong nuclear force.  I have assimilated the wisdom of a dozen conventions as to the cause of the ongoing financial flameout, and on the matter of its solution.

The root of the trouble, when you strip away all the jargon about Gaussian copulas and Credit Default Swaps, is debt.  The solution is to make it easier for people to get loans.

Am I the only person to find this a wee bit off-kilter?

I am but a simple man.  My schooling is not in the “real world” of the stock market but in the ivory-tower arcana of biology, ecosystem trophodynamics, and, you know, those parts of the planet that provide food and oxygen and waste filtration.  So my perspective is admittedly naïve, but I’m pretty sure that if anyone presented research at a biology conference predicated on the assumption that “Animal X first gets fat, and then goes out foraging for its food”— well, let’s just say that particular researcher wouldn’t be top of the list for future NSERC funding.  And I’m only slightly less confident that this also applies to chemistry, classical physics— hell, is there any natural system in which deficit financing works, in which energy can be spent before it’s acquired?

I think you’d have to go all the way down to the subatomic realm for that.  Virtual-particle pairs.  Hawking radiation.  But I don’t see a whole lot of practical relevance to the current situation, unless Humanity’s economic models and their practitioners were to be thrown at the event horizon of a black hole (which, granted, may not be a bad idea…).

And yet everyone, from Obama on down, seem to agree that the way to claw our way back out of our own singularity is to extend credit.  We have to fix the finance industry so that Joe Six-pack can get that loan to pay down his mortgage, so that Josephine Julep can send her kid to college.  The way to get out of debt, apparently, is to make it easier for us all to get into debt.

Here’s a wild thought.  Has anyone considered that we might want to follow the example of, you know,  every other physical system in the universe down to the fucking Planck Length, and burn only the resources that we already have? Has anyone considered living within our means?

Yeah, roll your eyes, Wall-Street boy.  I’m being childish and naïve—  because of course, so many of life’s essentials are so expensive that nobody would be able to buy anything if it all had to come out of cash-in-hand.  How many of us could afford to pay off a house up front?  How many could pay four years’ tuition in advance?

To which I’d respond, that’s circular:  that’s using the conditions resulting from a credit-based economy to justify the existence of a credit-based economy.  (I might also say, what God died and gave you the inalienable right to a split-level house in the burbs anyway?)

Okay, so what would I replace the current cart-before-horse economy with?  I have one idea, once again inspired by ecological systems:  I call it “forest fire economics”, and it will have a cameo role in State of Grace (assuming State of Grace ever gets off the ground).  It’s probably unworkable— as I say, I’m no expert on the Real World — but hey, that doesn’t make it any worse than the system we’ve got now.

More seriously, though, I wonder if we’re even capable of coming up with a real alternative— not because alternatives don’t exist, but because we’ve wired ourselves into a mindset that constrains our very thoughts within the current framework, that compromises our cognitive ability to contemplate truly radical alternatives.  Just this morning a bunch of us were arguing about resources in hand versus those on credit.  I invoked a bushel of grain as an example of something solid and useful and real, something that had intrinsic value outside the realm of economic theory.  The first question in response was “But what would its market value be?”

If we can’t even think outside this box, how are we ever going to build anything out there?

Still.  As I (and many others) have said, I don’t really know what I’m talking about.  Anybody want  to talk me off this ledge?

This entry was written by Peter Watts , posted on Sunday April 12 2009at 01:04 pm , filed under economics, just putting it out there..., rant . Bookmark the permalink . Post a comment below or leave a trackback: Trackback URL.

45 Responses to “Quantum Economics”

  1. I think some kind of credit-financing is a good thing, and pretty much unavoidable. If you know you are going to get some assets in the future, then borrowing against it if you need to is going to benefit you, even if you need to pay a premium for the service. Where there’s a need, there’s a market. And sometimes, you need that short-term liquidity boost to bootstrap yourself up; this scenario is not just convenient but can add wealth to an economy in a real and meaningful way.

    The problem is when these loans fail. Naturally, both cases are risks and may not work out. Since money works its way round an economy, so does debt. It is anti-money. And if the risks don’t pay off, it sucks liquidity and wealth out. Perhaps what we need is a different concept of money; one that is based on liquidity, reliability and actual wealth. Don’t ask me what that could look mlike, though. Whuffie?

  2. I don’t think you’re being naive. The problem is few have gotten raises in eight years yet objects (food included) have gone steadily up (even after gas has dropped, probably so companies can make payroll without using banks for short term loans). Attempting to live within the new relative means means buying stuff goes down exponentially which in turn causes more unemployment, which in turn causes less means to be had to live within. I’m not even talking credit, just eating and a rental roof over one’s head.

    The joke is, of course, huge goddamn raises were given, but only to those who were in charge of the fucking raises in the first place. It’s essentially the same problem as the previous depression, where workers can no longer afford the products they make causing an all-around dip.

    So what are we left with? More labor organization is the only way I see out of it. Scale is tipped too far in management’s direction and needs to be tipped back.

    But I’m no economist either. 😉

  3. All life will at a pinch risk energy below its homeostatic point on a good bet of energy-acquisition. That’s equivalent to borrow-and-invest. Save-and-invest is better, obviously, but borrowing works if you think you can earn more than the interest payments. A lot of capitalism is built on this, and it isn’t harmful – unless by unfortunate circumstance, everyone’s bets go sour at once. Stimulus might make sense here, allowing the restarted wealth creation to outpace the cost of paying down the stimulus debt.

    The obviously stupid thing, though, and here I agree with you 100%, is borrowing to consume. “Consumer led recoveries” are bollocks.

  4. So my perspective is admittedly naïve, but I’m pretty sure that if anyone presented research at a biology conference predicated on the assumption that “Animal X first gets fat, and then goes out foraging for its food”–well, let’s just say that particular researcher wouldn’t be top of the list for future NSERC funding.

    Sample bias. As the Wired article you link to says, all the biologists, chemists, and physicists that came up with the “wrong” answer went to work on Wall Street for million dollar salaries until about a year ago, whereas the grant-winning scientists and their naïve presentations stayed behind in academia.

  5. Yes and no.

    Yes, if you wanted to solve the big problem, then declaring bankruptcy and starting over is the right thing to do.

    However, doing so would totally wipe out the existing fiscal and financial systems. And the goal of the government is not to solve the problem, but to maintain the existing systems.

    The last time the government did anything ballsy was in the 1970s when Volckner was in charge of the Fed. He raised interest rates to an absolutely brutal level and KEPT THEM THERE despite pressure from every side. Inflation collapsed. Volckner did sign on to the Obama team, but he’s been mysteriously sidelined, kept on an advisory committee that has yet to hold its first meeting. And he’s not even an advocate for a wholesale replacement; he just gets stuff done.

    Now, if things get bad enough, then yes, something will happen, because the people applying political pressure to prevent a real solution will be gone. But that’s another story.

  6. Yeah, increasing labor costs is a great idea. Look at the companies with strong unions (ahem, auto)… how are they doing? Pre-bankruptcy, of course. Blaming this on golden parachutes is remarkably short-sighted, and even worse means you’ve fallen for our govt’s attempt to shift blame (not that those chutes are good, just a triviality).

    Here’s the short version of what happened: US govt forces banks to increase risky loans and then hides the problems. Some math jackoff who later fled to china figured out a way to represent different types of risk in a single qualitative measure, in a way that nobody- even him- really understood. Financial managers who were good at people and bad at math bought into it, and started bundling these risky mortgages in a way that supported a good risk rating. Then the housing market bubble burst and the math went tits up. Bam. Economic crisis, started by stupid govt policies and then amplified by wall street’s response.

    Now the new prez is taking advantage of the situation to ram through a social agenda before the country knows what’s happening, involving massive new spending which will lead inexorably to tax hikes on all, leading to further economic drag. A trillion here, a trillion there. Congress is voting for mammoth spending bills *without even reading them*. Fucking insanity all around.

    But what do I know, I’m just a molecular biologist…

  7. re the ‘unalienable right to a split-level house in the burbs’ line… Ha-ha! Glad I’m not the only one who thinks this. When those zero-down mortgages became popular I remember thinking my God… do you have to OWN a house that badly? If you can only put zero down, I’d take it as a hint that erm… you can’t afford a house and shouldn’t be buying one.

    Status symbols and keeping up with the jones-es are definitely part of the greed / lack-of-a-sense-of-enoughness problem. We almost need new ways of allowing humans to signal to each other that they’ve been successful at life. Ways that don’t require them to horde wealth, spend beyond their means or trash the planet’s resources.

    (hey… your dashes aren’t coming out as the intended html entities – think you missed the ‘e’ – in ’emdash’ and wrote ‘mdash’ instead?…)

  8. My first attempt was to compare credit to an animal’s expected calorie intake and how that’s more important to survival than it’s current fat reserves but it basically was just an inflation of this sentence to four terrible paragraphs.

    Instead I’m switching over to ‘cheap technical fix’ mode and present the following as a long term solution to the current and all future energy/financial/existential crises.

    We need to start cutting humans out of energy and material production entirely. I don’t mean we need a bunch of scary terminators running the world but we need to start working the kinks out of a technical ecosystem that we can manage and control to suit our needs.

    Consider a solar-powered factory that can meet its own energy requirements to produce more solar panels. Easy money right, you just supply the equipment, personnel and material to make more solar panels.

    Next step: make the factory intelligent and automated enough to produce the panels AND maintain it’s own machinery so humans don’t actually need to be there or do anything except deliver the aluminum and silicon and all the replacement parts. We’ve got more processing power on this planet than ever before and there’s no reason that we can’t at least start in this direction.

    Finally, and in order to make the solar panel factory totally self-sufficient, we need automated resource acquisition and delivery. This doesn’t have to be related to the original factory whatsoever it just has to be negotiated so that mining and refining robots can get the stuff they need into a usable state and drop it off in a manner that the factory can access it.

    There are really only three elements to the equation. Energy, material and processing power.

    Our automated factory provides the energy for other endeavors in exchange for material. If we can build some automated resource gathering technologies and interlink them we will be all set until the singularity comes crashing down.

    And I bet every water molecule in my body we could make something pretty tremendously close to a self-sustaining tech ecosystem for say…a trillion dollars or so.

  9. Hey! I said it was the electromagnetic force, not the strong nuclear. Difference. The carrier particles of both the strong and weak nuclear forces have mass, and therefore have a finite range due to Heisenberg. Photons, the carrier particles of the electromag, have no mass and therefore no range limit. To continue with the metaphor, under Bretton Woods we were still requiring our money at least to have mass. (Yes, gold wasn’t a terribly useful commodity, but it was something concrete.)

    And the problem isn’t quite lending in general. It’s lending for consumer goods, yes, but it’s also artificially low interest rates introduced to extend the construction boom (probably the most important domestic industry left) and exacerbated by China’s currency manipulations to keep the yuan at a fixed exchange rate to the dollar (which, of course, contributed massively to the undermining of the domestic manufacturing base, which in turn led to greater reliance on construction to keep the domestic economy afloat). On top of all this, which would merely cause a correction instead of a disaster, was the continual iteration of the debt into various new forms, which is where the aforementioned risk scalar comes in, as the people who used it never seemed to use a long enough timeframe for their calculations. Plus a gas spike. Plus an exhausting war. Plus unprecedented war profiteering.

    Shake well and serve.

    As for lending itself, when used for something with a much greater payoff than the extra cost of the loan, it’s still incredibly useful. Yes, it gives us something we can’t pay for yet. It also can give us something we couldn’t ever pay for, but we’re better off having. And once the loan’s paid, both parties are better off in the end.

    For those above recognizing the absurdity of everyone and their dog owning a house, consider that approximately 50% of the labor force in the United States should be renting, in order to maintain the flexibility required by the New Economy (all hail). Houses are huge, illiquid investments, with a lot of sunk costs and (contrary to the opinion of the housing market a couple years ago) not even close to guaranteed to increase in value. The US doesn’t really make much more than houses these days, though. Anyone got a solution for that?

  10. I do this for a living and I’ve been studying little else since September 17 and it makes absolutely no sense to me.

    Yes, we should live within our means. Some of us do. We don’t do well during debt-inflated bull markets, but we suffer much less during crashes. I wonder if that’s the same effect that gives us r’s and K’s?

    We know that catastrophic events happen much more often than the popular experts say. We even have good reason to think we know why: anything that happens very rarely we tend to underweight or overweight their significance. But why, in the financial world, did everyone underweight the risk? George Box and Gwilym Jenkins wrote the book on financial predictions and scattered throughout the text they make various simplifying assumptions that make the math tractable but after a while you start to wonder how well the models can represent reality. Box-Jenkins predictions start out by supposing that your error terms are distributed normally. They tell you to test that, but I’m guessing that investors rarely do. Indeed, normality is often a good null hypothesis. But any time your math tells you that you’ve just experienced a ten-sigma event it is time to consider the possibility that the error terms are not gaussian, not even close.

    If a bunch of investors had overweighted the risk of this happening, maybe we would have gotten out of it by now. Why did everyone make the same bet? Just because it made the math easier?

    We have mathematical models that are outlier-robust and nonparametric. Few people around here use them – why? Because robust methods don’t give you tight confident predictions quickly out of very little data. False confidence, as it turns out.

    When the high-risk people have done so well most of the time, why be cautious? Because when they are wrong, they are really /really/ wrong.

    I am so confused.

  11. The gal/fellow that said the govenment doesn’t want to topple our economy has echoed what I’ve read and heard exactly. It’s not that the economists disagree on the whole let-it-fall-down-and-rebuild thing, it’s that they all agree they simply can’t afford to do I for some reasn. They agree on the “solution” and agree they can’t do that solution.

    Regardng the solar powered factory: perpetual motion is fun to dream about.

    Appologize for typos; submitting from phone.

  12. Over the last few years I’ve become convinced that modern economics is basically Dungeons and Dragons for suits – it’s only claim to legitimacy is that everyone agrees to play by the same rules. (Also, the players sit around in glass-and concrete offices sipping Evian and tracking their stats with multi-monitor workstations instead of lounging in Mom’s basement with character sheets, d20’s, and Mountain Dew.)

    So stepping outside of the box means recognizing that role-playing, no matter what manual you use, just isn’t fun any more. Maybe we go the video-game direction – automate the rules by technical implementation (as Seth suggests); maybe we go the refrigerator box route – screw the shiny stuff and have fun with the leftover bits (ala Maker culture); etc.

    (And maybe the gaming analogy isn’t that useful…)

  13. Peter Watts asked:
    “Has anyone considered living within our means?”

    Certainly, many people have, and do. Most people I dare say know intuitively, probably even instinctively, that this is how they should be living, economic downturn or not. Unfortunately, a negative part of human nature is to want and want, to be “greedy” and “seek materialism”, because, well, others do and are, so they can, and feel they deserve it. Got the money, get the stuff. There is no balance. Live for the here and now.

    There are numerous examples of how the cult of materialism has impacted the lives of human beings – not all on Wall Street – one that was so glaringly clear and tragic – we witnessed the stampedes of stand-in-line-for-days-shoppers at “a big name store”, because they just had to buy the newest, latest, pop-culture gadget, game, device and status-symbol that some moneymaking anointed poo-bah deemed consumers must have – and someone lost their life in the ensuing beyond belief blind-greed stampede to “get the stuff”. Like an alcoholic, a gambler or drug addict – some people just cannot get off their addiction to materialism and spending beyond their means…

    It does not take anything more radical than for people to honestly, nakedly, look at themselves and their life and see that they have the power to choose to make a difference for the better, for themselves, in their own lives, for their family, friends, neighbors, strangers, town, city, country, and for the rest of the world. Starting with small choices and in simple ways, in not being addicted to the latest gadget, high-priced doo-dad, or pop-culture gotta-have-it materialism, favoring quality over quantity, buy only what you can, truly need and not just want, and pare down, endeavoring to simplify their life by having only what is absolutely necessary for the basics of life first and foremost, not desiring to have a McMansion (or two, or three), not buying a big gas-guzzling-polluting vehicle, spending way within one’s means and saving as much as one can, not having to have everything anyone else or everyone else has, helping your neighbors and the less fortunate than yourself…

    For the past 15 years, I have never “gotten cable tv”. Now, with the magic of digital tv, I can’t even get “free tv”, of which I really did, and still do not, watch much of at all. I don’t even have a cell phone, nor do I have high-speed Internet. Why? Well, mostly to save and be within my means, but also to be able to build up savings and also be able to help others, when I can, which I do, often. Don’t go to the movies much at all. Instead, books, music, creative endeavors, exercise, face to face social interactions and spending time in/with nature, fill the time I could otherwise spend in front of the toob and in cyberspace. I share my books and mags with others or give them to libraries and schools. I give clothes and food away to others. I recycle my plastic bags, don’t buy plastic water bottles and utilize eco-friendly shopping bags. I don’t have a car. I am grateful to have a job, a roof over my head, able to pay for medical insurance and basic necessities…and still I seem to have too much stuff.

    People need to make the leap from individualistic materialistic lives to a life of social and environmental interconnectedness. What you do affects others and what happens to others affects you. Going green and lean in respect for the environment and the future of this planet. Recycle, share, reuse, waste less, use less, donate and help more. Work for the common good with the future in mind. Strive for the simple pleasures and deep satisfactions in life, much of that being free or involves not much money to “buy”, to have, to experience.

    Recently, we have been alerted to that “Great Pacific Ocean Garbage Patch” that is not that far from where I live, and well, seems as if that does not matter that much to many people. Perhaps it is not a big deal since it affects fish, birds and turtles and not human beings, yet. I suppose it will take the loss of fisheries and and extinction or two of some fauna, especially, and flora, for enough human beings to be shaken up out of the sleepwalking of just moving along on the conveyor belt of same old same old existence *pretending* that fossil fuels are an endless supply of natural resource that somehow someway Mother Nature is magically renewing (just gotta go dig somewhere else on this planet) and our garbage and waste will “safely disappear”. Through some unforeseen worm-hole. Maybe it goes along a similar route that so many socks in the dryer do. Gone, never to be seen again. But look, there it is in the ocean, chunks, pieces and particles…inside jellyfish, filling up the stomach of a seabird…creating dead zones.

    People living on islands in the Pacific are losing their landmass as ocean waters rise and have to fight for the preservation and protection of their fisheries – while countries with bigger economies and more population want their seafood supply to continue, unabated – so our fish in our own waters costs more than many of us can afford, but it is more profitable to ship it to other countries where it fetches premium prices. All across the world, people have to make the hard choices to make due with less and to do more with what they have.

    Hey, Canadian Mining Company, Northern Dynasty, Inc. is slated to dig up the Bristol Bay Watershed, cause, wow, there is at least $300 billion worth of minerals there. Nevermind the loss, waste and wreckage of biodiversity there. Nevermind it’s the world’s largest spawning ground for sock-eye salmon. As we can see, money and materialism reins lord over all. As the planet’s natural resources continue to dwindle, and overpopulation and pollution increases along its course, the planet will change, most likely for the worse, and all the money in the world won’t bring back all that humanity has lost, because of what human beings did and inevitably will continue to do. The economy cannot continue to be run and managed the same way endlessly. The world has changed, the environment is changing, people have to change the way they do things. Evolve and adapt to a changing reality.

    Peter Watts pondered:
    “More seriously, though, I wonder if we’re even capable of coming up with a real alternative— not because alternatives don’t exist, but because we’ve wired ourselves into a mindset that constrains our very thoughts within the current framework, that compromises our cognitive ability to contemplate truly radical alternatives.”

    Human beings have and are coming up with great alternatives and have and are endeavoring to make a difference. Where I live, we are making choices to use recycled material, create less waste and utilize more energy efficient methods. We have solar, wind, wave and geothermal power being utilized for both commercial and private enterprises. More people are going back to the land and living more simply and environmentally respectful. However, so many people are quite reluctant to make the change to simpler more people-environmental-world conscious and conscience choices because it directly impacts their known lifestyle. (The average U.S. American citizen and resident is “rich” compared to many people across this planet.) Bamboo cultivation and alternative usage is a great example of what humans are doing to make a difference in renewable resources that benefits both human beings and the environment in a positive manner. The movements across the planet for more earth-friendly methods in agriculture, aquaculture and animal husbandry are also good examples of a more back to the basics life and comfortable self-sufficiency.

    I have a great “faith” that human beings are not hardwired to be greedy and materialistic. Time and again, it takes some serious shaking of the world, and more likely “their own world”, for many people to realize that there is more to life than what they choose to constrain and define themselves with. Life has become a trajectory of owning more stuff, and yet, at the same time, having less that is truly necessary and meaningful in our lives.

    Interestingly, many U.S. mainland States have been *cough cough* giving their homeless populations one-way-tickets to “Paradise”, because the environment is great all year round and we have the reputation for giving (it’s part of that thing Hawaiian Culture is known for). So our homeless population has grown significantly in the past decade. The cost of living is already high and climbing. Many people have lost their jobs. Many of us are going to take a pay cut in order to help the rest of the economy. We lost one old-timer local airlines (Aloha)-economy and competition, and have lost the interisland Superferry, -environmental and lifestyle impact and concerns. We are more crowded, populated, stressed, grid-locked, angry, violent and unable to afford living here. But we still have hope and still care, about each other and our island home. You gotta do what you gotta do.

    There is, and has been, for quite some time, a “poverty of the soul”, and no, I am not talking about “religion”, but I am referring to what many deem a spiritual-intuitive connection to nature and the environment, we are, after all, animals, biologically supposed to be interconnected with our environment, and not the man-made concrete and steel, wires and cables, electronics and ether, cyber and asphalt – the dependency, addiction, to man-made things, some of which contain synthetics and chemicals that have a profoundly negative impact upon the environment and human life. As the environment changes due to the loss of flora and fauna, and geographic regions are altered by the stripping of trees and plants, the melting of ice shelves and polar caps, humans have to deal with soil erosion and flooding, which in turn makes food production hard, if not at all viable, so we then turn to (what some deem) Frankenfood, genetically altered life forms and biotechnology, some of which is apparently necessary in the creation and production of transgenic plants and animals, pharmaceuticals, food sources and stronger, pest and disease resistant strains, in order to meet the needs of an increasingly needy and resource-scarce world, but at what cost and loss…it is not a natural cycle but a man-made created cycle. Balance is missing. There needs to be equilibrium.

    It is up to each and every one of us, as individuals to do what we can to make a difference, no matter how small, and to choose to do so with courage, hope and a positive outlook for what it is we do have and how our life stands at this moment, for it is certain that life is far worse for someone else on this planet, for so many people in this world. Cultivating gratefulness for what you do have, the basic simple necessities of life, appreciating the good and beautiful things that are free, and making choices to live a life that is sustainable, that’s a start and a path…nothing radical or hard about that at all.

  14. Leona@6, mdash (without the e) is indeed the correct spelling of the HTML Character Entity. My guess is that WordPress doesn’t allow direct input of ampersands. Apparently it does convert a double hyphen to an en-dash (and perhaps a triple hyphen to an em-dash), so the solution would be to use one of those.

  15. Somebody once asked Peter Watts to play his happy songs and he said: “these are the happy songs!”

  16. The bushel of grain is only as useful as the knowledge and expertise of the person holding it. If you don’t know how to store, mill, or otherwise prepare the grain, it is functionally valueless. Although it could likely be used, in a pinch, for bludgeoning someone. Perhaps even someone that one owes money to. Now there’s a cheery thought…

  17. The bushel of grain is only as useful as the knowledge and expertise of the person holding it. If you don’t know how to store, mill, or otherwise prepare the grain, it is functionally valueless.

    In the context of this thread I want to add that a bushel of grain is very valuable in the hands of someone that understands it’s demand and supply. If you have the only bushel of grain left on Earth, you need not know how to mill it … The problem comes when you have a bushel of grain but so does everyone else, yet you inflate the cost of your grain with wild speculative claims of shortages and fear.

    For the past 15 years, I have never “gotten cable tv”. Now, with the magic of digital tv, I can’t even get “free tv”, of which I really did, and still do not, watch much of at all. I don’t even have a cell phone, nor do I have high-speed Internet.

    I have all of those things ! I will seriously harm the person that tries to take away my high speed internet.

  18. Well, I really haven’t the manifesto others have posted (I’m talking about you, keanani), but I agree stock markets and such seem kind of wack. I feel most peoples “solutions” are wildly impractical, though. It’s easy to complain or criticize, but hard to come up with REALISTIC solutions. When the very bones of the system are flawed, it’s very difficult to rework the whole thing.

    However, the concept of credit isn’t stupid, in my opinion. I guess I would say the way it is viewed is a little skewed. I view credit as “convenience tax”. I pay a fee in order to get access to my money sooner, for things that I want now and not later. Examples that come to mind from my life: plane tickets to visit elderly family members, or student loans. I *could* wait and save for the tickets, but it’s possible my family members may die by then (no foolin’). I could wait to go to school until I can afford it, but it’s pretty hard to earn enough money for school without an education. Time-consuming, at least.

    It is true the market adjusts to the amount of money out there. It’s very interesting to consider if large ticket items like cars and property would be cheaper without such wide availability of loans. I’ve never considered that before. Again, I feel it would be very difficult to change this expectation.

    The most reasonable solution I can think of is education. I don’t know about the rest of you, but in school I learned a lot about finding angles of triangles and the motivations of Richard III, but nothing about managing credit or doing my taxes. I don’t know if parents are supposed to teach their kids this stuff, but mine sure didn’t. So when I was thrown into the big bad world at 18, it all had to be figured out from scratch. Maybe if there was a little bit of education on the subject in school, the “common man” would have a better idea of the risks of credit, and how to measure the risks involved.

    Personally, I went and got a financial planner. That sure helped!

  19. When you speak of “money,” are you talking M1, M2, M3, or some sophisticated blend of the aforementioned?

  20. I think most people here are referring either to M0 (easiest for people to get their head around) or somewhere between M1 and M2 (savings accounts are also easy to grok, but money markets aren’t).

    There’s also the confusion of a house for either a consumer good (it isn’t, not exactly) by the skeptics here or a capital good (which it most certainly is not) by the real estate markets and the mortgage industry which has self-destructed so spectacularly.

  21. Fatten then forage?
    Maybe some instances of the handicap principle? Or this instance of the belly bank?

  22. I have never understood the economy. Economists insist that continual growth in the economy is possible. The only problem with this is that it has never been demonstrated and is contrary to all laws of nature. I am reminded of the old (and false) example taught in every introductory zoology class of the linx and the hare. One or the other poulation can increase, but seldom simulataneously, and never indefinitely.

    I am lucky enough that I own a house. But other than the initial mortgage, I have never been in debt. I paid off the house as soon as possible and then obtained a secured line of credit against the house. If there is ever a month when I can’t completely pay off the credit card, I do so out of the line of credit. In this situation, the only one I am borrowing against is myself.

  23. Admittedly, I’ve made the same argument that deficit financing doesn’t exist in nature, but Peter’s asking the question made me think about the issue a bit more deeply. Any natural systems in which deficit financing works? How about nearly any social species? Wolves, ants, and bees as examples. In each, energy is invested in offspring (not necessarily from parent to progeny either) and they, in turn, help bring resources to the pack/colony in the future.

    This type of debt system seems perfectly sensible, which is probably why it has very little in common with the world financial system.

    To make sense of the current financial crisis, focus on the fact that the expectation that a dollar/euro/franc/whatever will have comparable value tomorrow as it does today is a fallacy. Without that expectation, we see that most lenders have been duped as much as the lendees.

    It might be a good idea to by that bag of grain today and not tomorrow.

  24. Ah, not exactly. You’re borrowing against your house. It’s better than unsecured credit (your card), but don’t fool yourself. The trouble with homes as equity is their inherent illiquidity – you can’t sell a piece of your house to pay off your line of credit if you can’t make the interest payments (spaghetti monster forbid). It’s still the bank loaning you the money, it’s still the bank who profits on the interest, and it’s still the bank who comes after you in your own personal doomsday scenario. You just have a large asset to give them more confidence in your fundamental ability to pay, and this means the risk on your credit is priced lower (you get a better interest rate).

    The only time you’re borrowing against yourself is if you, say, take money from your RRSP to buy your house in the first place. Otherwise, it’s all the guys in suits, and they still have you by the balls.

    As for non-growth economics, well, the human population is still growing, and baseline individual greed still drives up prices and wages year after year. Once the baby boomers begin retiring in force and the demographics shift for good, then we’ll see the econ 101 textbooks rewritten.

  25. “syn, on April 12th, 2009 at 6:05 pm Said:

    Yeah, increasing labor costs is a great idea. Look at the companies with strong unions (ahem, auto)… how are they doing? Pre-bankruptcy, of course. Blaming this on golden parachutes is remarkably short-sighted, and even worse means you’ve fallen for our govt’s attempt to shift blame (not that those chutes are good, just a triviality). ”

    I don’t think you can lay the entire blame on the government for the problem since your own culprit was in the private sector, I believe when he came up with the MBS idea. They obviously wanted a new bubble and they got it. Should have been alternative energy. Instead, Germany leads with solar windows for office buildings (an American company that went broke here and moved to Germany) and a Japanese man wins a contest for $9 solar oven.

    I’m not blaming golden parachutes for the problem. I AM blaming the thinking behind them, however, and argue that it It’s burn and run with no thought to the long term problem: Rising prices without rising income MUST mean less purchases and therefore a drop in company income and therefore an eventual drop in stock prices once laying people off stops working.

    But you’re right, I should have added they have to actually make something worth selling. Sometimes the obvious needs to be stated as well. Mortgage-backed securities was not it any more than Halliburton shipping “sail boat fuel” from Iraq to Kuwait was. It’s selling a swamp land in Florida.

    How many cars will corporate execs and other wealthy folk buy over the course of a year? Let’s be generous and say five a piece. Is that going to save GM even if every one were bought from them? Companies like this need a bigger market to survive.

    I argue that the idea that corporations have to have so much frigging growth every year, every quarter, every trading day is exacerbating the problem. Not every year is good for orange crops, why should it always be good for the DJIA?

    I don’t think spending bills are the answer either. I’m saying that corporations need to figure out who they’re going to sell to, and if it’s the ever shrinking middle class America, they need to figure out how to lower the price enough for them to afford it or pay them enough so they can.

  26. The nice thing about “credit” is that it increases perceived wealth (i.e., the money supply). The bad thing is that, like religion, “you gotta believe” (or you have, historically, a run on the bank). Increased credit should lead to increased productivity if, in true capitalist form, the money flows to where it receives its greatest (most efficient) rate of return. When an investment no longer provides this return, ideally it should fail (Schumpeter, capitalism and creative destruction). The present mess has been created by, paradoxically, too much and too little government interference: for example, Congress’s demands that, for the social compact, everyone should be able to own a house, and therefore government-sponsored lending agencies should provide the funds (through credit) to do so regardless of the debtor’s ability to repay, coupled with a complete absence of oversight of this dubious process. (Example: Miss Tillie, a waitress in Des Moines, qualified for a mortgage because she claimed to receive $300,000 per year in tips from Joe’s Diner — and her mortgage broker accepted her application with a straight face.) In like vein, Congress approved the huge increase in leverage for investment banks (from eight times to forty times deposits) — imprudent at best, while failing to provide adequate regulation. As small boys invariably do, everybody pushed the envelope until it broke. (AIG is another matter, the length of this post does not permit its discussion.) Peter is sniffing ’round an unfortunate truth, however: the cure for “bad credit” is “more credit.” Each economic cycle ends in a downturn; each downturn results in reflation with more credit, and each cycle, like dope, requires more of the magnificent mixture to get the party going again. This time, the bubble has been big enough that, coupled with globalization, the whole world, especially developing countries, has been affected. So the solution, globally, requires massive reflation with the international currency of record: U. S. dollars. This will result, inevitably, in massive inflation (which will enable governments to pay off their debts), provide riches for borrowers, and screw the savers who are attempting to “live within their means.” The solution for us little people: hold your savings in “stuff” — precious and industrial metals, sugar and other agricultural products, oil and energy, oh, and don’t forget — real estate. With the new subsidized mortgage rates, you’ll be able to borrow for two or three houses, and get the party started all over again. But remember: like the Catholic doctrine of Transubstantiation, this will only work if Everybody Believes. Cheers!

  27. London, on April 13th, 2009 at 10:09 am Said:
    “Well, I really haven’t the manifesto others have posted (I’m talking about you, keanani),…”

    ☺ Sorry. I’ve been thinking I need to apologize to everyone for my tendency of beaucoup major domo verbosity. Hopefully it is not an annoying “wall of words”, although it may be along the lines of “stream of consciousness”. Poor Peter, here on his website, on a terrifically brainiactic newscrawl that is both immensely interesting and terribly attractive to me for its cyber relayed high-brain power and science-oriented intellectual stimulation…well, hopefully when Peter comes across “keanani” and the usual if not seemingly inevitable “freight train of crunched together alphabetic renderings”, he is not off the bat cursing under his breath…but if he is (I totally understand :) ), there is one thing that I am certain of…his curse is not “Christ Almighty”…

  28. I strongly recommend folks read Dan Hind’s brilliant essay “Jump You Fuckers”, which made a lot more sense than most of the crap I’ve been reading.

    http://thethreattoreason.blogspot.com/2009/01/jump-you-fuckers.html

    The short summary: Watts is right.

    Another short summary: The rich fucked us.

  29. Julian Morrison Said:

    All life will at a pinch risk energy below its homeostatic point on a good bet of energy-acquisition. That’s equivalent to borrow-and-invest.

    I don’t agree. That’s drawing down on reserves, feeding off your fat. You’re spending currency you already have.

    Will Sargent Said:

    …if you wanted to solve the big problem, then declaring bankruptcy and starting over is the right thing to do. However, doing so would totally wipe out the existing fiscal and financial systems. And the goal of the government is not to solve the problem, but to maintain the existing systems.

    This is my fear. But just maybe, things are about to spiral so wildly out of control that the government’s intentions become irrelevant. Perhaps we are all about to have bankruptcy forced upon us.

    Seth Said:

    My first attempt was to compare credit to an animal’s expected calorie intake and how that’s more important to survival than it’s current fat reserves …

    If you’d said “future” instead of “expected” I would have agreed that it was more important than fat reserves, but disagreed that we were talking about credit. As it is, we don’t know how reliable the “expectation” is, and so I can’t even agree that fat-in-hand takes a back seat to it. Fat-in-hand is a certainty. You’ve already got it. “Expected” payoff? What the hell is that? It’s belief in my future success. Might materialize, might not. But no physical process in nature is going to spot me a twenty in advance just because I happen to be singing “Here Comes the Sun”.

    Madeline said:

    The bushel of grain is only as useful as the knowledge and expertise of the person holding it. If you don’t know how to store, mill, or otherwise prepare the grain, it is functionally valueless.

    This is true. I have since been told that a chocolate Easter bunny would have been a better example.

    Mark Said:

    Any natural systems in which deficit financing works? How about nearly any social species? Wolves, ants, and bees as examples. In each, energy is invested in offspring (not necessarily from parent to progeny either) and they, in turn, help bring resources to the pack/colony in the future.

    But the energy being invested actually exists, which means this is not a case of deficit financing. It may be a case of poor investment (if the offspring don’t pay off), but at no time does the organism spend energy that it does not actually have on hand.

  30. DUDES?

    The question about “But what would the market value of it be?” exactly illustrates the terrible problem of this modeling the economy on natural systems, where energy = money. No, no, no, no, no!

    The energy stored by living things might be a little abstract, but it’s real and measurable, and can be neither created nor destroyed.

    Money is not like energy in any way. You cannot deficit spend energy, because it is a physical fact of the bear or the fish or the plant. MONEY IS NOT REAL. YOU CAN DEFICIT SPEND MONEY BECAUSE IT IS A FICTION OF CONSENSUS.

    Please. Don’t get pure mutable abstractions confused with real stuff.

    Thanks, dudes.

  31. Money begets money.

    This is what makes micro-financing work. Bootstrapping in the real world is not so easy. (check out kiva.org!)

    So, I disagree that “people should live within their means”, at least categorically.

    The biggest problem as I see it, at least in the US, is in how much one should (or is allowed to) leverage (in terms of loaning and borrowing) based on one’s assets (what one owns). It’s simple to understand, one shouldn’t bet the house, car, wife and kids holding a pair of 8’s. Essentially, banks bet the house (their bank) on bad loans (mortgages and misc.); the result, global economic fallout.

  32. Long time no see. Well, I’m now officially in the killing-people industry which I mentioned so long ago. Now, on to economics…

    Value is fundamentally unlike energy in that it is not conserved when it changes hands. If it were, trade of any kind would never happen, as there would be no reason to pay the transaction costs unless you value what you got more than what you gave up, and neither would the second party. Such is the way with credit as well. The actual thing being traded in credit is time-preference. Everyone has time-preference, in that we’d rather have something sooner rather than latter, all else being equal, but some have higher or lower time preferences than others. Whenever there is a difference in value, there is potential for trade, and credit essentially lets people sell a delay in spending to people with high time preference in exchange for getting to spend more latter on, plus a premium for the risk of default.

    Problems arise, though, when the price of credit, the interest, does not match up with the market realities of the population’s time preferences. All the credit in the world is just fine when it’s financed through delayed-spending on the part of savers, but the artificially low interest rates of the past decades have essentially been financed with inflation. With fractional reserve banking and state-backed artificially low interest rates, it is not necessarily true that a dollar you borrow actually had to come from the present spending of someone else, and so credit becomes artificially cheap, and people start to buy more of it than is rational given the circumstances. The result is a massive consumer goods boom fueled by diverting resources away from investment goods, which is to say, capital consumption. Eventually, the physical realities of the economy catch up to the illusions of market distortion, and you get something along the lines of the recent clusterfuck.

    I’ve heard that Meltdown is an accessible, good analysis of the recent crisis, but I haven’t read it yet myself yet.

  33. AR says:

    Value is fundamentally unlike energy in that it is not conserved when it changes hands.

    THANK YOU. That is a better restatement.

    If it were, trade of any kind would never happen, as there would be no reason to pay the transaction costs unless you value what you got more than what you gave up, and neither would the second party.

    I see what you mean, according to economic theory, although I think in terms of intent, it probably started as an equal exchange with a promissory note. I doubt the first guys to use “money” were thinking in terms of transactional costs. They were probably thinking a little more concretely.

    “Your pig is exceptionally fine, and every one here in the village agrees that one of your spring pigs is worth 10 chickens. I only brought 8. We trust each other – would you take the eight now plus this rock with my mark and two drawings of chickens on it until I get back into town?” Something like that. After all, people were doing accounting in Assyria, so this idea is really old.

    Such is the way with credit as well.

    Now, see, that is a totally conscious trading at different values, because I agree to bring an extra chicken because of the delay. We agree the pig is only worth 10, but the 11th chicken is pure “pay you for your inconvenience” stuff. The value of the pig remains the same in our minds, but now we just assigned a “Wait Until I Get Back” trading value to a chicken.

    Thanks for the more elegant statement of why the model isn’t great. Money is a chit, and the value resides elsewhere, and this means no conservation of value to the money itself.

  34. Peter Watts said:
    “And yet everyone, from Obama on down, seem to agree that the way to claw our way back out of our own singularity is to extend credit.”

    And asked:
    “Has anyone considered living within our means?”

    Both seem to be addressed in the U.S. Government’s implementation of “Behavioral Economics” in fundamentally changing the way people live-

    I read this article in the April 13, 2009 Time Magazine:

    The U.S. Government has been utilizing “behavioral economics” in order to promote its’ agenda and change the way that the people of the United States of America live…

    “How Obama Is Using the Science of Change”, Time Magazine, April 2, 2009

    “Behavioral science — especially the burgeoning field of behavioral economics that has been popularized by ‘Freakonomics’, ‘The Wisdom of Crowds’, ‘Predictably Irrational’, ‘Nudge’ and ‘Animal Spirits’, which is the new must-read in Obamaworld — is already shaping dozens of Administration policies.”

    http://www.time.com/time/magazine/article/0,9171,1889153,00.html

  35. It occurs to me that there might be a market analog for energy: labor. If money is only useful in that you can exchange it for goods and services, and the value of a good is measured back to money again, then the fundamental value of money is what you can persuade other people to do for you — the amount of work that you want done that you can get done by paying or lending money.

    Stands to reason that the amount of labor that anyone can command is limited by the population they can control and how well they can organize it. So… this is a political problem? And there is a conservation law here, it’s just hidden behind a couple layers of indirection?

    If I see you singing “Here Comes the Sun” I might have to give you a twenty. The mental image is quite odd.

  36. Peter just found your website, though I’ve enjoyed all of your books.

    The current economic problem is like something out of the Rifter trilogy. Think the headcheese’s for a moment.

    The headcheeses had their own agenda that had nothing to do with what the humans were trying to do. The humans were operating under a series of assumptions that were false and ultimately caused disaster.

    The laws of free market economics are pretty much simple and brutal but chaotic as is nature itself.

    The current crisis had it’s genesis in politician’s wanting “fair” loans for housing. They set up a series of laws and perverse incentives to force banks to make loans to people who couldn’t pay them back.

    The banks in turn tried to make something out of these worthless loans by bundling them together and then selling them to other buyers, which spread the “poison” throughput the system. Trying to make something of value from nothing was sure to fail and it did.

    This is why bankruptcy is a feature not a bug. It allows the market ecology to reset itself with as little interference as possible – much like an island system might if a new species were introduced – and go on.

    If certain banks or other lending institutions are “to big to fail”, the best policy is for the government to break them up into smaller units(similar to Teddy Roosevelt breaking up the oil companies), but that should be the extent of government interference. Bankruptcy is basically the answer.

    The current “crisis” is pretty much analogous to the US gov’t deciding to wombats should be a new member of Florida’s reef system. Then when that failed, to double down on the wombat introduction along with elephants.

    Still, interested as always on your ideas in the new work. Hope it’s out soon.

  37. The current crisis had it’s genesis in politician’s wanting “fair” loans for housing. They set up a series of laws and perverse incentives to force banks to make loans to people who couldn’t pay them back.

    “The government made us do it!” hee hee.

  38. Bare Facts Said:
    Money is not like energy in any way. You cannot deficit spend energy, because it is a physical fact of the bear or the fish or the plant. MONEY IS NOT REAL. YOU CAN DEFICIT SPEND MONEY BECAUSE IT IS A FICTION OF CONSENSUS.

    And then AR added:
    Value is fundamentally unlike energy in that it is not conserved when it changes hands.

    …and then they and others detailed at varying length how “unreal” money is, and how inappropriate trophodynamic metaphors are when discussing it.

    Most of which I not only agree with, but that’s my whole damn point.

    Money may not be real, but people are. Food is real. Shelter is anything but hypothetical. And impoverished, disenfranchised mobs in the street may soon be not only real, but commonplace. All of these very real things are in thrall to a consensual hallucination with no correspondence to the real world.

    I think that’s a problem

    AR also said:
    Long time no see. Well, I’m now officially in the killing-people industry which I mentioned so long ago.

    Ah. Do you take requests? I have a list here somewhere…

    keanani said:
    Both seem to be addressed in the U.S. Government’s implementation of “Behavioral Economics” in fundamentally changing the way people live-… “How Obama Is Using the Science of Change”, Time Magazine, April 2, 2009

    And I have to say, that article gives me hope. Treating us like a bunch of Skinner pigeons is probably the closest thing to a rational plan for social engineering since the invention of judgmental deities and tickets to the afterlife.

    My quote of choice, though, is different from keanani’s, to wit: “What worked was creating a sense that we’re all in this together and you’re a social deviant if you don’t join us.”

    Keith David Smeltz said:
    It occurs to me that there might be a market analog for energy: labor. If money is only useful in that you can exchange it for goods and services, and the value of a good is measured back to money again, then the fundamental value of money is what you can persuade other people to do for you — the amount of work that you want done that you can get done by paying or lending money.

    Huh. You might be on to something there.

    If I see you singing “Here Comes the Sun” I might have to give you a twenty. The mental image is quite odd.

    It is, but if the result you hypothesize is at all likely I should probably figure out how to upload to Youtube.

    dwoodard said:
    Peter just found your website, though I’ve enjoyed all of your books.

    Welcome. And thank you.

    The current “crisis” is pretty much analogous to the US gov’t deciding to wombats should be a new member of Florida’s reef system.

    That’s not a bad analogy. Changing “wombats” to “unicorns” or “Vulcans” would make it even better.

  39. dwoodardsaid:

    The current crisis had it’s genesis in politician’s wanting “fair” loans for housing. They set up a series of laws and perverse incentives to force banks to make loans to people who couldn’t pay them back.

    The elephant in the room being, as always, race. The perception that black people were being unfairly denied credit was important in justifying application of government arm twisting. The current crisis is essentially due to America’s sense of white guilt. Maybe it’s what they need to get it out of their system.

  40. Bravely Brave Sir Anonymous says: The current crisis is essentially due to America’s sense of white guilt. Maybe it’s what they need to get it out of their system.

    Respectfully, Sir Anonymous, that is a silly reductionist view, claiming that greedy lenders had no hand in pushing greedy buyers to buy housing over-and-above what they could afford. Please show us that the defaulters are disproportionately non-white, when weighted for annual income and previous credit score, then I’ll listen.

    Until then, I will just assume you have never bought a house, and have no experience with the grotesque lengths lenders will go to get you to spend up to the maximum and beyond, if they know they are going to unload the loan next week.

    Mr. Watts said: “All of these very real things are in thrall to a consensual hallucination with no correspondence to the real world. I think that’s a problem.”

    I like it. The next time I go to buy one of your spring pigs, and I’m a chicken or two short on the trade, shall I carve two wooden chickens and offer them as promissory notes until I get back into town? I can paint them, and put my mark on them?

    Seriously, though, not to be flip, but the entire economy is built on money, which we have agreed is fluid, not conserved, essentially illusory, an idea only. What do you suggest?

    Also, are we done with “God Exists”? Or did you want the short summary of your position? I can go either way, but I’m not sure what/how/if we decided to end this?

  41. Peter Watts: …and then they and others detailed at varying length how “unreal” money is, and how inappropriate trophodynamic metaphors are when discussing it.

    I’m not saying that money is unreal, just that present monetary law has made it… unstable in its relation to real wealth.

    I highly recommend this as an intro into how money works and how it can be made to go wrong, and in terms of something which does hold thermodynamic analogy: calculation and efficiency.

    Inflation has other disastrous effects. It distorts that keystone of our economy: business calculation. Since prices do not all change uniformly and at the same speed, it becomes very difficult for business to separate the lasting from the transitional, and gauge truly the demands of consumers or the cost of their operations. For example, accounting practice enters the “cost” of an asset at the amount the business has paid for it. But if inflation intervenes, the cost of replacing the asset when it wears out will be far greater than that recorded on the books. As a result, business accounting will seriously overstate their profits during inflation–and may even consume capital while presumably increasing their investments. Similarly, stock holders and real estate holders will acquire capital gains during an inflation that are not really “gains” at all. But they may spend part of these gains without realizing that they are thereby consuming their original capital.

    By creating illusory profits and distorting economic calculation, inflation will suspend the free market’s penalizing of inefficient, and rewarding of efficient, firms. Almost all firms will seemingly prosper. The general atmosphere of a “sellers’ market” will lead to a decline in the quality of goods and of service to consumers, since consumers often resist price increases less when they occur in the form of downgrading of quality. The quality of work will decline in an inflation for a more subtle reason: people become enamored of “get-rich-quick” schemes, seemingly within their grasp in an era of ever-rising prices, and often scorn sober effort. Inflation also penalizes thrift and encourages debt, for any sum of money loaned will be repaid in dollars of lower purchasing power than when originally received. The incentive, then, is to borrow and repay later rather than save and lend. Inflation, therefore, lowers the general standard of living in the very course of creating a tinsel atmosphere of “prosperity.”

  42. Ah. Do you take requests? I have a list here somewhere…

    Not my department, I’m afraid. I’ll be working as a nuclear plant operator in USN submarines once I complete training here at NNPTC.

  43. Hmmm. Well. I like to think I live within my means… but in a few weeks shall be borrowing hundreds of thousands of dollars to live in a, yes, split-level ranch in suburbia.

    Why? Because I need to make room for the new child. Because it has land which I may put to use as I see fit. Because after tax breaks it will cost me less than my current two-bedroom walk-up, even factoring in additional maintenance costs. Because if I lose my job (manufacturing, heh) and drop the ball, it takes the Man 60 days (or less) to toss my family out of a rent, but I can keep a foreclosure tied up in court for more than a year.

    What’s not to like?

  44. The problem with the calorie intake or animal’s energy needs, as it relates to money, is that it doesn’t work-paper and plastic currency are symbols, representing resource base, and therefore, might be considered only as information, that happens to represent actual matter. The National Film Board has an excellent animation onthe origin of paper currency-essentially, a symbol representing actual gold that a certain royalty (forget which royalty) didn’t actually have. Animals, with perhaps a few exceptions-extremophiles, and certain simple organisms that after the larval stage, don’t actually eat, don’t store vast quantitiies of food, and are relegated to foraging for what’s there. Their very good at what they do, finding food, and crappy at what we do-using our brains to think beyond the very very basic “what’s in front of me and can I eat it.”

    Perhaps a better analogy would be to compare the current crisis to ancient peoples-we humans seem to have used some sort of currency, and trade and barter, for a long time. In fact, this could be considered a greed prolem, as well as a flawed trade and barter-it might be somewhat akin to trading with someone, who doesn’t actually have what eh says he does, or, seems to be managing a few others’ basic materials of life. You’re in a bad position, either way.

    I’ve haven’t been crying too many tears-after all, while I am seeing decent people tossed out of their homes, and that sucks, big time, I’m also seeing people used to living way beyond their means, to a level below that, and, well, oh darn, really, I’m sad for ya, you had X millions, and now you gotta live with less X millions? Hey, my thoughts are for the mother and father with 8.5 jobs etween them, who are actually making the mortgage payments, are hardworking, and still get tossed out of their homes, and lose a vehicle that they desperately need, to commute to those 8 different jobs, not the guy who is whining because now, instead of gold plated toilet seats, he has to sit in plastic toilet seats, like the rest of us.

  45. whoops-a few spelling errors-oh, and suddenly I think of squirrels-I wonder how they would work in the analogy/equation? They do store food…they also freqently forget a certain percentage of what they’ve hidden…hmn.