How it Works

Today's Toronto Star has a wonderful account of how government works at its most senior levels.

My graduate and doctoral work in public policy included several stints in both central agencies and policy departments and this is as accurate a reflection as I have seen on life at this altitude.

If the streamlined booking of boardrooms so clearly baffles the best and brightest in government, there would seem to be no hope for the larger issues.

Read and weep!

Where is This Economy Going

Markets are down about 2% at mid day today, which is but a single data point in an increasingly unstable market that looks very much like last summer. More worrisome is the longer term prospects for western economies reflected in market trends and in macroeconomic numbers.

If the market dips this summer, as it did last, this will represent the third turn back in three years from post-recession highs. And each of these peaks was fueled by dumping vast amounts of cash into the financial sector, primarily via the U.S. Fed. Despite these historical infusions, inflation remains near zero, suggesting that absent such intervention we would be in a period of long-term deflation.

Normally, as U.S. election year would see an uptick in markets and this may well happen later in the summer. And Bernanke does not want to determine the election either by sitting tight or being overly aggressive. So we might yet see a modest QE 3 as the election nears. But the economic numbers out of Canada and the U.S. as well as the BRICS are not inspiring. And Europe dances along the edge of the abyss month after month and year after year.

My own guess is that the most likely outcome moving forward is more of the same. Like the Japanese, we might be entering an extended period of perhaps decades of economic malaise -- a sort of lost generation or generations. This will be driven by unprecedented concentrations of wealth that both limit purchasing power and created vast pools of investment capital that have no place to go because demand, limited by that purchasing power, remains flat.

Welcome to the root canal economy -- a sort of permanent condition of chronic pain that is not serious enough to demand immediate alleviation but sufficient to make life more or less permanently miserable.

The Church for Whom?

Over the weekend, at the suggestion of a friend who has a very mixed view of all things 'church', I dug into the work of Gretta Vosper. Vosper's message is very similar to that of John Shelby Spong and others in its attempt to carve out a space separate from both an increasingly tepid and irrelevant liberal Christianity and an increasingly muscular fundamentalism that certainly scares me and probably should scare you too.

For her, this space is one in which we can become entirely at ease with, and even supportive of, a secular world view and focus instead and shared ethics and values -- on building a better world "with or without God." In North America at least, the question of who ultimately occupies this very contested space may well emerge as the key question regarding the future of the church. It is where almost all that is interesting for us is happening right now. And in this context, her argument is compelling. But, for me at least, it is not ultimately persuasive.

It is compelling because she like so many others makes such a strong case both for setting aside rigid strictures on belief so beloved of the fundamentalist crowd and many others as well and of centering the church and its work on the building of community instead. Indeed, this accords with much of what we can know of the early message of the Jesus community. So far, so good.

Why is this unpersuasive? In a passage on the work of the Jesus Seminar in recovering evidence of the historical Jesus, she insists that the message of this itinerant prophet that emerges is utterly impractical in 21st century North America. Yet this is to miss the point. It was pretty impractical in 1st century Roman occupied Palestine too.  It got people dispossessed and killed. And it did so because it rejected the dominant norms, even the progressive and inclusive dominant norms, of the day. It was meant to be, and was, a faith by and for losers. And just as with Forrest Gump, belief was as belief did. It was a liberation of the dispossessed and it scared the Romans because it should have.

So in a sense, Vosper is right. All of the dogma and ritual and power and money (and not just for the Catholics) are accretion. Using the social scientific, historical and literary tools now available to us, we can now dig back much further, to at least the very early church. And our inability to relate to that early church, I would suggest, arises not from our modernity but from our power and wealth. This helps to explain why when the urban and rural poor in Latin America, most nominal church members, began to form communities of faith autonomous from the Roman hierarchy the message of this early church was clearly evident in their reading of scripture. And it was here in the second half of the last century that a theology of liberation arose.

Yet this is not very evident in North America, particularly from our upper-middle class perch. Here what we see on the one hand is the religion of empire in the suburban megachurches catering to the Chevy Tahoe crowd and on the other, empire lite (less filling but tastes great) in the dying liberal churches catering primarily to the soon to be departed. And of course an attempt, of which Vosper is a part, to carve out a new space which might attract  those members of our class rightly disaffected with both. This is not a perspective that encourages great hope.


Yet in urban slums and rural backwaters throughout the world, the church is growing explosively. And here the church is again a church of the dispossessed -- of the losers. Here as well, however, the religion of empire can be found both in an evangelical movement that is a thinly disguised prosperity gospel and in a conservative catholicism and protestantism that has all too often served the forces of reaction. But it is here as well that the message that Vosper and others reject as impractical is also gaining a toehold, however tenuous.

Deje Vu All Over Again

A blog entry today by Paul Krugman reminds us of bigger picture that should be far more obvious to policy makers and pundits than it is.

In the face of declining employment numbers and wobbly markets in the U.S. and impending doom in the Euro zone, the increasingly dominant policy prescription is retrenchment. Neo-hooverism is alive and well, and inexplicably, we seem determined to repeat the mistakes of 1937 and push the world economy off the cliff again.

This zombie recession that just won't die seems to be gathering life once again. Andrew Mellon, Hoover's treasury secretary, lives! And a seemingly progressive president, like Roosevelt then, seems determined to place political expediency and fear of an intransigent right ahead of economic common sense.

The Bears are Getting Vewy Excited

Following the elections in France and Greece, markets are once again starting to look very shaky. Not surprisingly, the bears are out in force this morning portending doom and gloom.

But perhaps what is most interesting is a technical pattern that has been forming for more than a year.and that might signal a historic reversal of the long boom that began in the early 1980s and showed the first signs of real trouble with the dotcom boom and bust at the turn of the century.

If this pattern were to hold, then we could be entering into the decline of a mode of economic development that began in the 1970s with the collapse of consensus that emerged from depression and war in the 1930s and 40s. It is important to remember, though, that technical analysis is never about predicting the future but rather is about identifying emerging possibilities.

Yet if this pattern does hold, then the repugnant outcomes of neoliberalism and the recent resurgence of the more radical left may point toward an emergent consensus, one possibly far more progressive than that which has dominated the previous decades. And if this proves to be true, then early adapters will be particularly rewarded. And of course defenders of a collapsing status quo are likely to fare poorly.

So the question of the moment to institutional leadership everywhere is: which side are you on?

Wall Street and Welfare

I have not been a participant in this years remarkable market run-up. In part this is because of what is happening in my life outside of investing. But in part it is because something about this market just seems wrong.

And what seems wrong is that it is becoming increasingly apparent that this market is seemingly far more reliant on free money handouts than on economic fundamentals.  We appear to have gone from casino capitalism to welfare capitalism. So for the third time in three years as hopes for further printing runs are dashed the markets retreat.  And I wonder if this signals not only a gut-wrenching correction like last summer and fall, but either a prolonged period of market stagnation or decline  stabilized only by periodic infusions of free money.

Chris Hedges on Black Bloc & Occupy

Chris Hedges has a new post on the Truthdig.com website talking about the infiltration of the occupy movement by the lumpen of the Black Bloc..

There is much to agree with here. The 1% would clearly welcome any opportunity to tar the occupy movement with this brush. And there is little doubt that this lunatic fringe is deeply compromised by infiltration.

And yet we should be cautious about throwing the anarchist baby out with the Black Bloc bathwater. The very heart of the Occupy movement is an anarchist sensibility that refuses to institutionalize in order to fit more comfortably into the mainstream. David Graeber in particular has spoken eloquently and at length on this movement as a new political ethos that rejects the institutional norms of politics as usual.

Non-violent resistance and civil disobedience is and must remain the very foundation of this movement or all hope really is lost. And that means rejecting all tactics such as the Black Bloc that preach a mindless politics of hate and destruction. But it also means resisting the much more alluring siren call of institutional normalcy.

The form of this movement is its message. This is the very difficult path that the real (as opposed to the sanitized and airbrushed) MLK walked to such great effect. Let us hope that this wonderful movement is able to continue on this very narrow and difficult path.

Surely the Apocalypse is at Hand?

So Italian bonds have crossed the sustainability line of 7%. Europe has lurched another step closer to the abyss. Our own finance minister is is provisioning the bunker and boarding over the windows to wait out the storm. If this doesn't look like 2008 it surely smells like it.

It appears that the Bank of Canada is getting ready to once again buy sketchy debt from our perhaps not quite so fortress-like banks. Policy initiatives are being postponed. Our deficit hawks have all too belatedly become deficit skeptics.

Stay tuned . . .

Today's Reading

I have spent today working through two books. The first is Matt Taibbi's wonderfully entertaining Griftopia: Bubble Machines, Vampire Squibbs and the Long Con that is Breaking America. Taibbi's often raunchy and over the top analysis of the 2008 meltdown trades elegant analysis for a kind of "let's cut the bullshit" honesty. His chapter on Allan Greenspan, "the biggest asshole in the universe" is alone worth the price of admission. There is little new except the raw emotional  reality of what really happened. And it is about to happen all over again.

The second is Michael Perino's gripping story of the 1932 Pecora hearings, The Hellhound of Wall Street. More than just a story, however, it is a reminder of how little has changed over the past eighty years. The story of "Sunshine Charlie" Mitchell and National City Bank, of obscene wealth and greed juxtaposed with a flagrant disregard for the consequences visited on innocent victims shows how little has changed and how little we have learned.

Clearly we are headed back into trouble, and it is good to remind ourselves that it was not just institutional failure but truly evil behaviour by those in positions of trust in privilege both eighty years ago and more recently.

Time to Return to Writing

After a hiatus of about two and a half years, it is time to start commenting again. Much has happened in that time, but in a sense the world seems to have come full circle, as the financial catastrophe that I was writing about then seems to have returned.

This time, ground zero is not Wall Street but southern Europe. Greece is bankrupt and Italy, with its staggering public debt, now appears to be headed for the abyss. The potential costs are staggering and this time the capacity of state and quasi-state institutions to actually deal with these frightening eventualities is even more in doubt.

But perhaps most worrisome of all is the seeming inability of those in power to even acknowledge the reality that they face. The appearance is one of folly.