John Cassidy, "Anatomy of a Meltdown: Ben Bernanke and the financial crisis", The New Yorker, 12.01.2008, 53-61.
As house prices soared, many Americans took out home-equity loans to finance their spending. The personal savings rate dipped below zero, and the trade deficit, which the United States financed by borrowing heavily from abroad, expanded greatly. Some experts warned that the economy was on an unsustainable course; Bernanke disagreed. In a much discussed speech in March, 2005, he argued that the main source of imbalance in the global economy was not excess spending at home but, rather, excess saving in China and other developing countries, where consumption was artificially low. Lax American policy was helping to mop up a 'global savings glut.'
'Bernanke provided the intellectual justification for the Fed's hands-off approach to asset bubbles,' Stephen S. Roach, the chairman of Morgan Stanley Asia, who was among the economists urging the Fed to adjust its policy, told me. 'He also played a key role in the development of the 'global savings glut' theory, which the Fed used as a very convenient excuse to say we are doing the world a big favor in maintaining demand. In retrospect, we didn't have a global savings glut - we had an American consumption glut. In both of those cases, Bernanke was complicit in massive policy blunders on the part of the Fed.'
...
In May, 2006, Bernanke rejected calls for direct regulation of hedge funds, saying that such a move would 'stifle innovation.' The following month, in a speech on bank supervision, he expressed support for allowing banks, rather than government officials, to determine how much risk they could take on, using complicated mathematical models of their own devision - a policy that had been in place for a number of years. 'The ongoing work on this framework has already led large, complex banking organizations to improve their systems for identifying, measuring and managing their risks,' Bernanke said.
It is now evident that self-regulation failed. By extending mortgages to unqualified lenders and accumulating large inventories of subprime securities, banks and other financial institutions took on enormous risks, often without realizing. Their mathematical models failed to alert them to potential perils. Regulators - including successive Fed chairmen - failed, too.
...
One of the supposed advantages of securitizing mortgages was that it allowed the risk of homeowners' defaulting on their mortgages to be transferred from banks to investors. However, as the market for mortgage securities deteriorated, many banks ended up accumulating big inventories of these assets, some of which they parked in off-balance-sheet vehicles called conduits. 'We knew that banks were creating conduits,' Don Kohn, the Fed's vice-chairman, told me. 'I don't think we could have recognized the extent to which that could come back onto the banks' balance sheets when confidence in the underlying securities - the subprime loans - began to erode.
...
A senior Fed official recalled, 'The problem wasn't the size of Bear Stearns - it wasn't the fact that some creditors would have borne losses. The problem was - people use the term 'too interconnected to fail.' That's not totally accurate, but it's close enough.' In the repot market, for example, Bear Stearns had borrowed heavily from money-market mutual funds. 'If Bear had failed,' the senior official went on, 'all these money-market mutual funds, instead of getting their money back on Monday morning, would have found themselves with all kinds of illiquid collateral, including CDOs and God knows what else. It would have caused a run on the entire market. That, in turn, would have made it impossible for other investment banks to fund themselves.
...
Bernanke couldn't say so publicly, but he agreed with some of the critics. For years, the Fed had warned that Fannie and Freddi were squeezing out competitors and engaging in risky mortgage lending practices. Bernanke would have liked to combine a rescue package with extensive reforms, but he realized that an overhaul of the companies was not politically feasible. Despite their financial problems, Fannie and Freddi still had many powerful allies in Congress.
12.01.2008
11.29.2008
The Economist
"Grease my palm", The Economist, 11.29.2008, special report, 10.
The reason for the persistent corruption is not that the Russian people are genetically programmed to pay bribes, but that the state still sees them as its vassals rather than its masters. The job of Russian law enforcers is to protect the interests of the state, personified by their particular boss, against the people. This psychology is particularly developed among former (and not so former) KGB members who have gained huge political and economic power in the country since Mr. Putin came to office. Indeed, the top ranks in the Federal Security Service (FSB) describe themselves as the country's new nobility - a class of people personally loyal to the monarch and entitled to an estate with people to serve them.
"Plan C", The Economist, 11.29.2008, 73.
Still, helping banks recapitalise only partly mitigates deleveraging. Many large buyers of debt assets have simply disappeared, such as 'structured investment vehicles', or SIVs, that used short-term financing to buy up asset backed securities, often from banks seeking to free up capital. At one point they held up to $400b in assets. But, unable to roll over their funding, they have been either reabsorbed by banks or closed. In October one of the last big SIVs, Sigma Financing Corporation, with $27b in assets, collapsed. Its liquidation by creditors is thought to have contributed to the plunge in prices of asset-backed securities which has made it impossible for new securities backed by student, credit-card and car loans to be issued.
Securitisation is decades old, mundane and vital. Banks and other lenders routinely pool their student, car, small-business and credit-card loans, and residential and commercial mortgages into securities and sell them to investors, leaving room for them to make new loans. The deleveraging of banks may be inevitable and healthy, but the disappearance of the securitisation market is not. Without it, 'millions of Americans cannot find affordable financing for their basic credit needs,' Hank Paulson, the treasury secretary, said on November 25th.
"Singing the blues", The Economist, 11.29.2008, 75.
Humbled by a devastating, Lehmanesque run on its shares, Citi has become the latest, and largest, financial institution to need rescuing. The giant bail-out gives the bank breathing space. But it also leaves Citi in what a prominent financier calls a 'financial no-man's-land': still too leveraged for comfort and too cumbersome to manage effectively, yet far too big to fail.
Citi's off-balance-sheet exposures - $1.2t at the end of September
[how can off-balance-sheet be construed as anything but fraud?]
The reason for the persistent corruption is not that the Russian people are genetically programmed to pay bribes, but that the state still sees them as its vassals rather than its masters. The job of Russian law enforcers is to protect the interests of the state, personified by their particular boss, against the people. This psychology is particularly developed among former (and not so former) KGB members who have gained huge political and economic power in the country since Mr. Putin came to office. Indeed, the top ranks in the Federal Security Service (FSB) describe themselves as the country's new nobility - a class of people personally loyal to the monarch and entitled to an estate with people to serve them.
"Plan C", The Economist, 11.29.2008, 73.
Still, helping banks recapitalise only partly mitigates deleveraging. Many large buyers of debt assets have simply disappeared, such as 'structured investment vehicles', or SIVs, that used short-term financing to buy up asset backed securities, often from banks seeking to free up capital. At one point they held up to $400b in assets. But, unable to roll over their funding, they have been either reabsorbed by banks or closed. In October one of the last big SIVs, Sigma Financing Corporation, with $27b in assets, collapsed. Its liquidation by creditors is thought to have contributed to the plunge in prices of asset-backed securities which has made it impossible for new securities backed by student, credit-card and car loans to be issued.
Securitisation is decades old, mundane and vital. Banks and other lenders routinely pool their student, car, small-business and credit-card loans, and residential and commercial mortgages into securities and sell them to investors, leaving room for them to make new loans. The deleveraging of banks may be inevitable and healthy, but the disappearance of the securitisation market is not. Without it, 'millions of Americans cannot find affordable financing for their basic credit needs,' Hank Paulson, the treasury secretary, said on November 25th.
"Singing the blues", The Economist, 11.29.2008, 75.
Humbled by a devastating, Lehmanesque run on its shares, Citi has become the latest, and largest, financial institution to need rescuing. The giant bail-out gives the bank breathing space. But it also leaves Citi in what a prominent financier calls a 'financial no-man's-land': still too leveraged for comfort and too cumbersome to manage effectively, yet far too big to fail.
Citi's off-balance-sheet exposures - $1.2t at the end of September
[how can off-balance-sheet be construed as anything but fraud?]
10.11.2008
Science News
Bruce Bower, "Pain relief you can believe in", Science News, October 11, 2008
"Our data suggest that religious belief alters the brain in a way that changes how a person responds to pain." - Irene Tracey (University of Oxford) p.9
"Practicing Catholics perceived electrical pulses as less painful while viewing an image of the Virgin Mary than while viewing a non-religious picture. Functional MRI showed a change in these volunteers' brain only while looking at the religious icon." p.9
[Opiate of the masses indeed! Making sense of suffering helps us endure it. Just one of many ways that we are fundamentally psychosomatic.]
"Our data suggest that religious belief alters the brain in a way that changes how a person responds to pain." - Irene Tracey (University of Oxford) p.9
"Practicing Catholics perceived electrical pulses as less painful while viewing an image of the Virgin Mary than while viewing a non-religious picture. Functional MRI showed a change in these volunteers' brain only while looking at the religious icon." p.9
[Opiate of the masses indeed! Making sense of suffering helps us endure it. Just one of many ways that we are fundamentally psychosomatic.]
9.27.2008
Science News
Bruce Bower, "Blindfolded babies show ability to learn how others see the world", Science News, September 27, 2008
'This first-of-its-kind training study shows how infants use themselves and their own experiences to understand the inner lives of others' - Andrew Meltzoff (University of Washington in Seattle) [10]
Bruce Bower, "Study evaluates kids' therapies", Science News, September 27, 2008
On the upside, research shows that cognitive-behavioral therapy eases post-traumatic stress disorder and other trauma-related problems in the young. On the down side, most mental-healthy practitioners use other therapies for kids and teens that lack scientific support. [11]
'This first-of-its-kind training study shows how infants use themselves and their own experiences to understand the inner lives of others' - Andrew Meltzoff (University of Washington in Seattle) [10]
Bruce Bower, "Study evaluates kids' therapies", Science News, September 27, 2008
On the upside, research shows that cognitive-behavioral therapy eases post-traumatic stress disorder and other trauma-related problems in the young. On the down side, most mental-healthy practitioners use other therapies for kids and teens that lack scientific support. [11]
9.13.2008
Science News
Tom Siefried, "It's Likely That Times Are Changing", Science News, September 13, 2008
Yet quantum physics requires time to tell the universe what to do - time is necessary for things to happen. Or, as the famous restroom graffito puts it, time is nature's way of keeping everything from happening at once. [27]
[What if all the potentialities of the universe existed in extreme superposition, disentangled by the momentary effect of what we call 'time'? But that the past, the present and the future still remain inextricably tied to each other in a Parmenidean totality? That we merely experience expressions of this totality, as destiny.]
In quantum math, time is represented in a formula called a wave function, which describes a multiplicity of possible realities. [27]
'I showed that you could make different choices of what you mean by time and get any law of physics you want.' Andreas Albrecht, a cosmologist at the University of California, Davis, says. [28]
If you can choose any time you like and get different laws, it makes no sense to say that the universe is ruled by a single Constitution of Physics. The cosmos becomes more like the United Nations, a hodgepodge of jurisdictions with diverse codes of conduct. 'The clock ambiguity suggests that we must view physical laws as emergent from a random ensemble of all possible laws,' Albrecht and Iglesias write. [28]
"Freedom to choose different clocks means choosing from among a multitude of possible laws, some wildly different from those in human textbooks. But quasiseparability places limits on which sets of laws humans could possibly experience. Only those laws consistent with quasiseparability would permit systems containing objects like physicists. [28]
[We exist in an object frame of reference, where the experience of objective coherence occurs on account of reality's quasiseparability. But that is not to say that simultaneously right now, many non-objective laws of physics are superimposed upon our reality, affecting the nature of our being; as we are but one physical expression of reality]
Yet quantum physics requires time to tell the universe what to do - time is necessary for things to happen. Or, as the famous restroom graffito puts it, time is nature's way of keeping everything from happening at once. [27]
[What if all the potentialities of the universe existed in extreme superposition, disentangled by the momentary effect of what we call 'time'? But that the past, the present and the future still remain inextricably tied to each other in a Parmenidean totality? That we merely experience expressions of this totality, as destiny.]
In quantum math, time is represented in a formula called a wave function, which describes a multiplicity of possible realities. [27]
'I showed that you could make different choices of what you mean by time and get any law of physics you want.' Andreas Albrecht, a cosmologist at the University of California, Davis, says. [28]
If you can choose any time you like and get different laws, it makes no sense to say that the universe is ruled by a single Constitution of Physics. The cosmos becomes more like the United Nations, a hodgepodge of jurisdictions with diverse codes of conduct. 'The clock ambiguity suggests that we must view physical laws as emergent from a random ensemble of all possible laws,' Albrecht and Iglesias write. [28]
"Freedom to choose different clocks means choosing from among a multitude of possible laws, some wildly different from those in human textbooks. But quasiseparability places limits on which sets of laws humans could possibly experience. Only those laws consistent with quasiseparability would permit systems containing objects like physicists. [28]
[We exist in an object frame of reference, where the experience of objective coherence occurs on account of reality's quasiseparability. But that is not to say that simultaneously right now, many non-objective laws of physics are superimposed upon our reality, affecting the nature of our being; as we are but one physical expression of reality]
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