Reader Tim C pointed us to a post on Tim Price’s blog, “The Price of Everything,” which provides astute financial and sometimes social commentary. Below is an excerpt:
Dear Western banking establishment,
I notice that your unauthorised credit facility from international lenders of last resort now totals approximately $10 trillion. As a taxpayer and therefore your largest shareholder I would be grateful if you could repay this facility at your earliest convenience. I have charged you an additional £30 for this letter and a monthly unauthorised overdraft fee of £28. If you do not repay this facility shortly I will have no choice but to become further massively impoverished along with legions of fellow taxpayers for multiple generations to come.
I would also be grateful if the strategists and economists who work for you could abstain from publishing their unsolicited opinions about resolving the banking crisis within the financial media. I am sure you will agree that hearing from the same strategists who worked for the architects of such widespread financial destruction is likely to irritate those of us who were not actually complicit in the extraordinary and venal credit boom of the last several decades. There is an expression that if you’re not part of the solution, you’re part of the problem. Those of your employees who were the public face of the problem are, I think you will agree, unlikely to represent the solution, unless perhaps they are fired – en masse, from a giant howitzer, into an area where they can do no further harm. Alaska, perhaps. I would further suggest that the high profile commentators who work for you and who have implicitly played their part in marketing and then amplifying this catastrophe might consider quietly entering another field with superior ethics and enhanced value to society at large: perhaps as piano players in brothels. This note has been copied to the letters editors of The Financial Times and The Wall Street Journal (which I understand is shortly to be renamed simply The Journal on the basis that Wall Street no longer actually exists – as was noted this week by Messrs Wen Jiabao and Vladimir Putin at Davos. Don’t worry about not being there – you weren’t missed).
Since the start of the year is always a time for slimming and working off the excesses of the festive period, I wonder whether your industry would consider operating along similar lines. Just as there is no real need to have 18 different coffee bars all touting their wares along my High Street, there is probably no real need to have 18 different banks, not all of which are subsidiaries of Santander, clogging the High Street and busily not wanting to extend me back any of my own money so generously lent to them.
I would also be interested in your views as to the wisdom and efficacy of the monstrous pile of credit being shovelled at you and your peers by governments when it was overmuch credit creation that precipitated this crisis. I do not, of course, expect anything other than a self-interested response. But you may find the following observations pertinent. If they seem acutely relevant today it is because they were written in the early 1930s, by one Garet Garrett (and a grateful hat tip to M. Gandon):
“The general shape of this universal delusion [that is, credit] may be indicated by three of its familiar features.. First, the idea that the panacea for debt is credit.. The burden of Europe’s private debt to this country now is greater than the burden of her war debt; and the war debt, with arrears of interest, is greater than it was the day the peace was signed.. Debt was the economic terror of the world when the war ended. How to pay it was the colossal problem. Yet you will hardly find a nation, state, city, town or region that has not multiplied its debt since the war. The aggregate of this increase is prodigious, and a very high proportion of it represents recourse to credit to avoid payment of debt.
“Second, a social and political doctrine, now widely accepted, beginning with the premise that people are entitled to certain betterments of life. If they cannot immediately afford them.. nevertheless people are entitled to them, and credit must provide them.. Result: Probably one half of all government, national and civic, in the area of western civilization is either bankrupt or in acute distress from having over-borrowed according to this doctrine.. Now as credit fails and the standards of living tend to fall from the planes on which credit for a while sustained them, there is political dismay.. When [people] have been living on credit beyond their means the debt overtakes them. If they tax themselves to pay it, that means going back a little. If they repudiate their debt, that is the end of their credit. In this dilemma the ideal solution, so recommended even to the creditor, is more credit, more debt.
“Third, the argument that prosperity is a product of credit, whereas from the beginning of economic thought it had been supposed that prosperity was from the increase and exchange of wealth, and credit was its product.”
The post continues here. Enjoy!
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Dear Mr Price,
I can fully understand your distress about the current financial crisis, but be fully assured that everything is in hand and going according to plan – even if the overall scheme is rather technical and may seem opaque at present.
With the fullness of time the strategy now implemented will yield fruit, and things will return to normal.
In particular, let me reassure you that the moneys that you have donated, and also your future donations are neither “lost” or wasted. In fact, in the longer term these moneys will form the basis of the security necessary for my close friends in Wall Street to be able to lend money to your children at a reasonable rate of interest.
Thus while me giving money to big banks at this moment might not seem to be in your immediate interest, by taking the longer term view (as I must) you can see that it is in the interest of your children.
Sincerely,
Ben
It won’t be long before people start connecting the dots between wall street and starvation. How many people could be fed, immunized, and educated on the bonuses paid to Merrill staff, for example?
Or even that paid to Stan O’Neal?
This is a question for real economists, not the bs kind who too often populate the canyons of NYC: would we Americans be better off taking the TARP money funneled to bonuses at Goldman Sachs and spending that to help the Palestinians try to build a new life for themselves? Which project would have higher ROI for our children?
Yves: terrific post.
Increasingly we are seeing similar writings appearing in the blogosphere: the synthesis of economic analysis and socio-political thought.
As we pass into the second, darker phase of The Crisis, we see it beginning to take on a life of its own, an identity and a personality. People are trying to get their minds around it in more than just mathematical ways.
The author is attempting to describe the growing realization that an era has passed and a brave new world is emerging from the mist. He is simultaneously getting that old existential angst which comes at the moment one realizes how tenuous was the security of the last era. The music has suddenly stopped. People are suddenly behaving differently. The thin veil that usually protects us from the blinding light of harsh reality has frayed and we can see so clearly now that reality bites.
This will all end badly. Every American should purchase a baseball bat.
The baseball bat is a touching piece of Americana. You’ll know who to use it on and when to use it.
ROFL, it has begun.
Skippy
Prospero Ends the Revels
Our revels now are ended, these our actors,
As I foretold you, were all spirits
And are melted into air, thin air:
And like the baseless fabric of this vision,
The cloud capp’d towers, the gorgeous palaces,
The solemn temples, the great globe itself,
Yea, all which it inherit shall dissolve
And, like this insubstantial pageant faded,
Leave not a rack behind. We are such stuff
as dreams are made on, and our little life
Is rounded with a sleep.
Shakespeare
"Let the great gods,
That keep this dreadful pother o'er our heads,
Find out their enemies now. Tremble, thou wretch,
That hast within thee undivulged crimes,
Unwhipp'd of justice: hide thee, thou bloody hand;
Thou perjured, and thou simular man of virtue
That art incestuous: caitiff, to pieces shake,
That under covert and convenient seeming
Hast practised on man's life: close pent-up guilts,
Rive your concealing continents, and cry
These dreadful summoners grace."
—W. Shakspere (& 6th Earl of Derby perchance)
Ben
I take it that long term you mean 20 years or so.
That was (somewhat painfully) amusing.
Not sure how the UK peasants are processing this situation, but US peasants I work with (student-lending in one of the top 4 CB’s) are starting to realize – ever so slowly – that these liberal Democrats are really trying to socialize the economy and give their “hard earned tax-money” to “those people” again. Ahhh, American peasant self-loathing and stupidity is boundless, BOUNDLESS. Something that’s not really comprehended by the intellectuals that inhabit sites like this. It should be a fascinating summer listening to Faux News whip-up the dumbasses into hatred.
Glad I don’t leave near any of the “red-state” (or “red city”, or “red county”, or “red cul-de-sac”) ghettos. This is going to get ugly fast.
Everyone, just invoice the Banks receiving TARP, for your portion back with the same loan structures they use on you, for the last 5 years.
Lets cut out the middleman (the Government) and get our money back, the way loan institutions do or the free market way. What is good for the Goose is good for the Gander they say.
Cheeky Skippy
Yves,
Thanks for your postings. I don’t know any more than the rest where this is all going but I do know what I think about some of the cast of characters in charge and it is not positive. While I am not a violent person, there are some of our fellow citizens who might get a bit out of hand when they really understand who specifically is screwing them…and they have guns. If I was rich I would start being really scared….the rich don’t have enough money to buy the security to protect themselves from the masses that will want their hide soon.
In less than 2 months from now we will have enough “moral outrage” to bring down the house of cards that is Wall Street. Good things can come out of a crisis and we can only hope that the one we are entering will precipitate long term good for humanity.
I hope that everyone continues to hammer home the message that the losses that we have experienced and are anticipating from this mess
go far beyond the “profits” from these crimes over the past 50 years. We don’t need a stake in the heart of capitalism specifically but sure as hell need two or more in the heart of the theocratic fascisn that passes for unfettered capitalism in our world.
Glad I don’t leave near any of the “red-state” (or “red city”, or “red county”, or “red cul-de-sac”) ghettos. This is going to get ugly fast.
Yes, John, we “red state” people are very very bad and you don’t want to be anywhere near us as society slowly returns to the primordial ooze! We are even ARMED, for gods sake. We drink corn likker, howl at the moon, engage in lowbrow peasant behavior such as watching NASCAR and the Blue Collar Comedy Tour, and we eat liberals like yourself for breakfast, lunch, and dinner (liberals ARE kinda gamey though, which might explain my gastrointestinal problems)!
I also hear you can get red state “cooties” by posting on blogs where the peasants hang out…….
Whoa, Skippy, is that YOU???
I agree “it” has already begun. A lot of people really will be caught unprepared, I’m afraid, and it won’t be just “the rich” who will become targets –that is, the definition of “rich” tends to change… Anyone who has anything that someone else does not have –and needs or wants– becomes “the rich.”
CitizenKate