Corn Again

Woke up this morning in a motel in or near Princeton, IL. Got here late last night, after slogging through yet another interminable Chicago traffic meltdown. Couldn't see much then, but peeking through the window this morning reveals blue skies over a sea of bright yellow cornstalks, with the occasional John Deere logo in the background. Will drive back through Iowa, so should see more of the same. Will also see dozens of manufacturing plants, since people still build things, as well as grow things, in this part of the country. Michigan was like that too, on an even larger scale. Admittedly, I saw one huge building with a "space available" sign out front (550,000 sq. ft.!), and a few more in worse shape, but most of the factories I saw looked functional.

Taking a leisurely drive. Will be back in Wichita Friday, to face a dead computer and a mountain of mail.

No Jazz Prospecting

No new news here. Still in Detroit, although I'll be leaving in a day or two, heading back home. Have hardly listened to any music at all -- the new William Parker has been stuck in the boombox for the whole week, and not because I'm thrilled with it, although it's good enough it hasn't sent me searching for something else. No record stores. No book stores. I did finally finish the James Galbraith book (The Predator State), and recommend it highly. Meant to read Thomas Frank next, but in honor of the polls I picked up Robert Kuttner's Obama's Challenge instead. Very nearly done with the work I've been doing, so next month should see some sort of return to normalcy. Just not quite yet.

No Jazz Prospecting

Still on the road, for at least one more week. No jazz prospecting, or music writing at all. Not even any scuttlebutt to report. Internet access remains very sporadic. Haven't read a newspaper in weeks, let alone watched TV. Haven't been in a record store, or even a book store. Have spent a lot of time in home improvement stores. Getting to the point where I can lay down a pretty decent bead of caulk.

Who Could Have Known?

Still in Detroit, more often offline than on, deprived of news and media of all sorts. But for some reason the New York Observer arrives in the mail -- a final reminder that newspaper hound Kalman Tillem lived in this house. Andrew Sarris has a review of W., and I was struck by the following quote:

Oliver Stone's W., from a screenplay by Stanley Weiser, arrives at a strange time in our nation's history, when even Iraq and Afghanistan have been pushed off the front pages and away from the TV talking heads by our current doomsday financial crisis. Of course, Mr. Stone, Mr. Weiser and their array of gifted collaborators had no way of knowing before they finished work on their production that the darkest days of the Bush presidency would soon dawn with what now seems like a Herbert Hooverian plunge into the abyss of a worldwide economic collapse. Unfortunately, there is very little discussion of the laissez-faire policies of the Bush administration in W., which might have given the film an aura of prophecy.

Actually, the plunge has been pretty obviously in the cards for quite some time now. Charles Morris' The Trillion Dollar Meltdown was written about a year ago. Kevin Phillips' Bad Money dates from the same period, but was merely an update of his 2006 American Theocracy. Even those problems were evident long before, with Paul Krugman's 2001 book Fuzzy Math the first alert on W.'s economic trajectory. Few speculative bubbles have ever been more plainly obvious than the recent housing bubble: all you had to do was note how property and rental prices diverged. Rising property values were fueled by cheap interest meant to pump hot air back into a declining stock market. With real wages headed downward, all that free money had to go somewhere unreal. Of course, lack of financial regulation and the great Bushist belief that reality could be forged through mere boldness made matters all that much worse. The details may have been hard to predict, but the general outline was always evident. A good, close look at Alan Greenspan should have sufficed to give it all away.

I've seen several pieces on uncanny similarities between the current financial crisis and the 1930s. But another point has been thus far ignored: the role of naked political ambition in setting up the crisis. There is a precedent: Richard Nixon. Both Nixon and Bush won first terms with precariously thin margins. Both were obsessive politicizers: indeed, it's impossible to think of any other politicians so wrapped up in their reelection prospects. Both wasted huge sums on hapless wars. Both soon ran into economic problems. Both responded with extreme measures, including jawboning the Fed to pump up the economy with low interest rates. Both presided over major devaluations of the US dollar. Nixon used wage/price controls to temporarily cover up the dollar losses, setting the stage for a huge inflationary run for the rest of the decade. We can now look back on Nixon's policies, starting with his ending of the Bretton Woods system, as the point from which real incomes started to decline, and America started returning from New Deal equality back to oligarchy. Bush worked through the post-2001 recession by feeding the rich, first with tax cuts then with cheap unregulated money. The result was a housing bubble combined with massive corruption. Like Nixon's schemes, Bush managed to look just plausible enough to hold together his 2004 campaign, but since then we've witnessed one thread after another unravel. How much damage such short-sighted politics will produce remains to be seen. Even in Nixon's case we've never fully accounted for the results.

Of course, the other thing that Nixon and Bush have in common is the two lowest second term approval polls in history. Even if the details of their manipulations slipped past with little notice, their self-absorbed slime elicited revulsion, especially as the results turned so bitter.

It's the Workers World

Andrew Leonard: Consumers vote with their wallets. Several interesting things here, especially a quote from James Livingston:

The Great Depression was the consequence of a massive shift of income shares to profits, away from wages and thus consumption, at the very moment -- the 1920s -- that expanded production of consumer durables became the crucial condition of economic growth as such. This shift produced a tidal wave of surplus capital that, in the absence of any need for increased investment in productive capacity (net investment declined steadily through the 1920s even as industrial productivity and output increased spectacularly), flowed inevitably into speculative channels, particularly the stock market bubble of the late 20s; when the bubble burst -- that is, when non-financial firms pulled out of the call loan market in October -- demand for securities listed on the stock exchange evaporated, and the banks were left holding billions of dollars in "distressed assets." The credit freeze and the extraordinary deflation of the 1930s followed; not even the Reconstruction Finance Corporation could restore investor confidence and reflate the larger economy.

Leonard adds, underscoring the key point:

Livingston does a much better job of unpacking that dense paragraph than I can, but the essential point is that in the decade leading up to the Great Depression, the profits from a growing economy did not get recycled back into worker wages, but were diverted into speculative activity. Just so, in recent decades, we have witnessed enormous increases in productivity and huge corporate profits, but wage growth for most Americans has barely kept up with inflation.

This expresses something I've long suspected: that a big part of the growing inequality gap is really just hot air, nothing more than a speculation-fired inflation of asset prices that have no relationship to real (or even normative) values. In saying this, I don't mean to disparage anyone upset over growing inequality, which regardless of its lack of economic substance has been damaging politically, and threatens to get much worse. But this argues for something even more basic: that wealth not based on labor is ultimately illusory, and that our fascination with such wealth is ultimately disrespectful and derogatory to the labor that actually keeps the world working. Moreover, this disrespect of labor threatens to undermine the world working, to an extent that we can hardly conceive of.

It is very important that we recognize how critical labor is to our well-being. If there is a silver lining to our current economic collapse, it's the growing suspicion that capital isn't up to much if any good on its own.

On the Lam

I've been totally offline for seven days now. Drove to Detroit, where I've been working on my late father-in-law's house, trying to convert it into my sister-in-law's house. Several changes are most evident, starting with being in a house with no newspapers. There is TV, but not anything I've been able to, much less cared to, watch. So I was rather shocked yesterday to sit down in a restaurant and notice the TV showing Dow Jones figures down around 8500 -- a drop of a couple thousand since last I noticed. Couldn't touch base with the internet until today, due to a wiring snag we haven't solved so much as worked around. In any event, I've been too busy to worry.

Should be here another week, maybe two. Built a fence. Installed seven vinyl replacement windows. Hopefully the new kitchen floor will go down tomorrow, followed by new base cabinets, counter top, sink, dishwasher, stove. Interesting work. I never understood how chain link fence worked before, but it's pretty obvious once you look at it closely enough to build one. I've watched people install windows before, but not as closely as when doing it myself. Tore down the old kitchen tonight, an act of deconstruction literally as well as semiotically -- not to mention archaeologically. This follows a couple of weeks of working on my own house, and will be followed up by several more.

Needless to say, no Jazz Prospecting this week, nor next week. Couldn't even put up the usual notice last Monday. Packed some stuff, but haven't listened to much: Bobo Stenson's piano record has been good late evening fare; I've dabbled in François Carrier's digital box a bit, enjoying what I've heard; managed to play the new MOPDTK on the way up, and it certainly has strong moments; old Nik Bärtsch records have become comfort fare. That's about all I recall.

Finished Andrew Bacevich's The Limits of Power: The End of American Exceptionalism, which was better than I expected. It helps a lot that he gives the left credit for spearheading all movements toward social justice, instead of just carping about how the left were undeserving even when right. He also tees off on the general-admiral ranks of the military. I'd say that the problems go much deeper, but that's a much needed start. Started James Galbraith's The Predator State: How Conservatives Abandoned the Free Market and Why Liberals Should Too. Looks like a tremendous book.

Music Week

Music: Current count 14869 [14850] rated (+19), 790 [757] unrated (-33). Accounting up to the Detroit trip. Didn't get around to filing this until I got back, but it should have appeared here.

Unpacking:

• Chet Baker: Chet in Chicago (1986, Enja)
• Adam Birnbaum: Travels (Smalls)
• Bill Carothers: Home Row (Pirouet): Oct. 30
• Todd Coolman: Perfect Strangers (ArtistShare)
• Dan Cray Trio: Live: Over Here Over Heard (Crawdad)
• The Miles Davis All-Stars: Broadcast Sessions 1958-59 (1958-59, Acrobat)
• Garry Dial & Terre Roche: Us an' Them (Just Dial Roche)
• Jason Domnarski Trio: Notes From Underground ()
• Echoes of Swing: 4 Jokers in the Pack (Echoes of Swing)
• John Ettinger/Pete Forbes: Inquatica (Ettinger Music)
• Bill Evans Trio: Sunday at the Village Vanguard (1961, Riverside/Keepnews Collection)
• Erik Friedlander/Mike Sarin/Trevor Dunn: Broken Arm Trio (Skipstone)
• Dizzy Gillespie Big Band: Showtime at the Spotlite (1946, Uptown, 2CD)
• Michael Higgins: The Moon and the Lady Dancing (Michael Higgins Music): Jan. 1
• Cynthia Hilts: Second Story Breeze (Blond Coyote)
• Jesus H Christ & the Four Hornsmen of the Apocalypse: Happier Than You (Jesus Christ Rocks)
• Ruslan Khain: For Medicinal Purposes Only! (Smalls)
• Rebecca Kilgore/Dave Frishberg: Why Fight the Feeling? The Songs of Frank Loesser (Arbors)
• Deborah Latz: Lifeline (June Moon Productions)
• Carmen McRae: Live at the Flamingo Jazz Club London May 1961 (1961, Acrobat)
• Jason Miles: 2 Grover With Love (Koch)
• Jessica Molaskey: A Kiss to Build a Dream On (Arbors)
• Thelonious Monk: Thelonious Himself (1957, Riverside/Keepnews Collection)
• Rob Mosher's Storytime: The Tortoise (Old Mill)
• Mostly Other People Do the Killing: This Is Our Moosic (Hot Cup)
• Jovino Santos Neto & Weber Iago: Live at Caramoor (Adventure Music)
• Sean Noonan's Brewed by Noon: Boxing Dreams (Songlines): Oct. 14
• Charlie Parker: Washington D.C., 1948 (1948, Uptown)
• Chico Pinheiro & Anthony Wilson: Nova (Goat Hill): Nov. 12
• Putumayo Presents: Women of Jazz (Putumayo World Music)
• Sonny Rollins: Roadshows Vol. 1 (Dual Doxy/Emarcy): advance, Oct. 28
• Draco Rosa: Vino (Phantom Vox): advance, Sept. 29
• Samba Meets Boogie Woogie (Adventure Music)
• Jenny Scheinman (Koch)
• Jenny Scheinman: Crossing the Field (Koch)
• Trygve Seim/Frode Haltli: Yeraz (ECM)
• Steve Shapiro/Pat Pergeson: Backward Compatible (Apria)
• Nina Simone: To Be Bree: The Nina Simone Story (RCA/Legacy, 3CD)
• Martin Taylor: Double Standards (The Guitar Label)
• Eric Vloeimans: Gatecrash (Challenge)

Recycled Goods: September 2008

File here.

Browse Alert: Bailing

Update below.

Haven't had time to surf much less blog, and picked an inopportune time to do so, given that we're witnessing something like the collapse of the capitalist system. The following are some pieces that piqued my interest, although they're becoming eclipsed by events almost as fast as they're filed. I'm sure there's much more of interest, but I haven't had time to dig, and ultimately decided I should post this now because I'm traveling tomorrow and prospects of adding to it are slim and slimmer.

As of this writing, the bailout bill has been passed by Congress and signed into law by Bush. Paulson got his $700 billion, but not as free a hand as he wanted. I can't say that there's no good reason to help the bankers, but they're hardly the only ones in need, and I also don't blame anyone who feels resentful that only when bankers bully their way to the front of the soup line. Unfortunately, the US has delegated so much of its financial infrastructure to the private sector that their failure can extend way beyond their own limited liability corporate interests. A better solution might be to shore up public sector finances while letting the nonproductive bubbles deflate, but we haven't covered that conceptual distance yet. I'm not a person who holds any hope for revolution, so I can't take any joy in watching the capitalist system collapse. But at least some lessons should be obvious from this debacle, starting with the fact that the push to deregulate and the Reaganesque glorification of greed should by now be completely discredited. (This, by the way, pretty much explains the Republicans who fought the bailout bill: its passage acknowledges the failure of the Reagan Revolution, as such their only excuse for hanging on to power. Having committed themselves so thoroughly to myth, they have little choice now but to stick their heads so snugly up their arses that they lose all sense of reality.)

On the other hand, I've never bought into the Reagan myth. Even at the time I frequently argued that the only boom industry left in 1980s America was fraud. What we saw through a series of asset bubbles was a gross inflation of increasingly imaginary values. In some ways this just looked like old-fashioned rich-get-richer, but it became increasingly rarefied as more money broke loose to chase its own tail. In reality, the chasm widened less than both sides thought, not least becuase the rich wound up holding bags of debt from the increasingly impoverished poor: default on that debt, which we are seeing primarily in the mortgage area right now, is one way of settling the books. But there's a lot more of that in the pipeline -- credit card debt is an obvious case -- so I expect a lot more leveling in the future, even with bailouts for the politically well-connected.

Paul Krugman: Financial Russian Roulette [09-14]. Published 9/14, 14 days ago (and then some), ancient history, at least far enough back that the Paulson bailout plan was still just a future possibility. Reasons to be nervous, part 1.

And as the unknown unknowns have turned into known unknowns, the system has been experiencing postmodern bank runs. These don't look like the old-fashioned version: with few exceptions, we're not talking about mobs of distraught depositors pounding on closed bank doors. Instead, we're talking about frantic phone calls and mouse clicks, as financial players pull credit lines and try to unwind counterparty risk. But the economic effects -- a freezing up of credit, a downward spiral in asset values -- are the same as those of the great bank runs of the 1930s.

Final sentence: "Yikes."

Paul Krugman: Cash for Trash [09-22]. More on the bailout plan. Sketches out a four-stage analysis of the crisis. Notes that this only deals with the fourth stage, and that even so it only promises to help things (err, bankers' bottom lines) if the taxpayers significantly overpay for the finance industry's toxic waste. Krugman isn't opposed so much as he feels that any such bailout should be in exchange for equity. Otherwise, the people who caused this problem would simply be imdemnified against their own recklessness.

Krugman's blog has been a good source on this period. He accepts the need to do something like the bailout, largely because he fears the consequences of not acting, but he doesn't like the details of Paulson's proposal, and the whole thing is getting to him. One later post [08-02] he commented that "Joe Stiglitz seems to have the same view on the bailout I have: lousy plan, better to pass it tomorrow than not." More emotionally but less concisely, on [08-01] he put it this way: "So am I for the bill? Yuk, phooey, I guess so. And I'm very angry at Paulson for putting us in this position."

Billmon: Things Become More Serious [09-22]. Not sure who Billmon is, but he claim in everyday life to be some sort of financial writer, and he's got this covered pretty well.

That being the case, it was probably inevitable that the bubbles would continue to grow in size and destructive force until they finally outstripped even the US government's ability to manage them without triggering a run on the biggest bank of all -- itself.

We may not be there yet. Both the dollar and the commodity prices could stabilize, at least temporarily -- particularly if the Cheney Administration (or should I say the Goldman Sachs Administration?) and the Dems in Congress can quickly reconcile their differences and ram the MOAB through the legislative colon (and up ours). Further disasters are not inevitable -- or at least, they don't have to happen all at once.

But if and when it comes, disaster (the kind that turns financial panics into searing generational memories) will unfold in a string of events that will look very much like what we saw in the markets today -- only on steroids.

Andrew Leonard: A cry of rage from Wall Street [09-26]. Via Andrew Sullivan, quotes a "distraught e-mail from a money manager":

I am a lifelong (51 years old) "rock-ribbed" conservative. . . . What an eye opener this week has been! I now realize what a blowhard Newt truly is by advocating the GOP bail on the Paulson Plan. As a professional money manager I can tell you I am shocked, dismayed and depressed that the Speaker would excoriate the GOP to abandon this plan which is URGENT and necessary to avoid a financial catastrophe that once commenced may be irreversible. The level of ignorance of financial and economic reality displayed by the Speaker, Rep. Boehner, Sen. Shelby, et al., has been frightening and sad. I thought the GOP had a better grasp of such matters than the Dems. Apparently not. And if this has been pure election gamesmanship as I suspect? The willingness to play politics with the U.S. financial markets is appalling and disgusting.

The Republicans are good at arguing that problems are matters of individual responsibility, not something the public should worry over or bother about. This line is comforting to people who don't actually share the problem. Unfortunately for the Republicans, people who find themselves beset by problems, especially those who can't identify the flaw of personal responsibility, start to lose faith with the doctrine. That's been happening steadily over the last decade, but in small and unobvious dribs and drabs.

James K Galbraith: How Much Will It Cost and Will It Come Soon Enough? [09-29]. Comments favoring passage of the Paulson-Pelosi deal, with reservations and sensible alternative ideas, starting with getting rid of the FDIC cap, which would provide an insured haven for cautious investors, and would help shore up consumer banks.

Glen Greenwald: Bailout follows the 10 normal principles for how our government functions [09-29]. Examples (first line quotes for each of the principles):

1. Incredibly complex and consequential new laws are negotiated in secret and then enacted immediately, with no hearings, no real debate, no transparency.
2. Those who created the crisis, were wrong about everything, drive the process. Experts who dissent from the prevailing Washington orthodoxy, particularly ones who were presciently warning about what was happening, are simply ignored -- systematically excluded from the process.
3. Public opinion is largely ignored, as always, and public anger is placated through illusory, symbolic and largely meaningless concessions.
4. The Government begins with demands for absolute power so brazen and absurd that anything, by comparison, seems reasonable.
5. Wall Street, large corporations and their lobbyists own the Federal Government and both parties, and (therefore) they always win.
6. The people who run the Washington Establishment are drowning in conflicts of interest.
7. For all the anger over what Wall St. has done, the Government -- as it bails them out -- isn't doing anything to rein in their practices.
8. When the Government wants greater and greater power and wants to engage in pure corruption, it need only put the population in extreme fear and it gets its way in every case.
9. On the most consequential and fundamental questions that define the country, the establishment/leadership of both political parties are in full agreement, and insulate themselves from any political ramifications by acting jointly.
10. Whenever you think that the Government has done things so extreme that it can't top itself -- torture, theories of presidential lawbreaking, a six-year war justified by blatantly false pretenses -- it always tops itself.

Andrew Leonard: Byron Dorgan's warning about risk [10-02]. Quotes Senator Dorgan (D-ND) from nine years ago, when he opposed the Phil Gramm-led repeal of Glass-Steagall's separation of commercial and investment banking. He said: "I think we will look back in ten years and say we should not have done this." Didn't even take ten years. Neither did the S&L deregulation -- the cleanup of which was only ten years earlier.

Leonard has also been superb throughout the crisis. His column is called "How the World Works," which he has a pretty good grasp on, giving him a big leg up on almost everyone else trying to catch up.

Update: Found this in the scratch file, never posted, don't know how old it is, but it seemed to fit in here:

Tom Engelhardt: The Fate of the Bear Market. Or, "The Little Administration That Couldn't." A quick rundown of the ongoing train wreck known as the Bush Administration. A few years back I figured this would be the theme of my book. Even then it was clear that nothing Bush did would work, and that everything they touched would have to be cleaned up and rebuilt by whoever came along after then -- assuming by then we hadn't lost all sense of living standards. My little value added was to be the aperçu that the disaster wasn't just a matter of incompetency, which was much in evidence, but was deeply engrained in their very mode and manner of thinking. That's still true, but even that's becoming a commonplace observance.

Sep 2008