God is dead, Marx is dead, Friedman is dead... and I am not feeling too well, myself.

The last week my genius friend Bing - post-graduate student in Physics in the U.S. - who is knowledgeable about everything on earth (and out), was kind enough to agree on the old post on the Chicagoans Waterloo. It then started a short messages exchange that I am assembling here. It will be nice to read it in two years or twenty years and see how much we were wrong or right to be as concerned and hopeful for a change as we are now.

B: totally agree with your opinion!! maybe you've also seen this:

http://www.pbs.org/moyers/journal/10102008/watch.html

George Soros was Karl Popper's student at one point, perhaps that explains why he recognizes fundamentalisms / unquestioned ideologies with dubious assumptions when he sees one.. whether it's communist or liberal.. unlike most economists / speculators.. i've always thought that unfettered free market economics with the assumptions of society progressing due to rational actions done by self-interested individuals (plus the "trickle down" philosophy) and an infinitely elastic market don't seem quite correct.. but unlike in physics, there's only one experimental lab for economics, and we have to pay the price if the assumptions turn out to be wrong.. i guess Soros has a much better way of articulating this situation, that's why i'm going to buy his book!!

W: Hey Bing, thanks a lot for the link!I actually haven't seen it yet,which is kind of a shame I can say now...indeed,what he says is just a consequence of your neat (and amazingly synthesized) point on the misleading foundation of neoclassical economic theory - brought to his recent splendour by the fundamentalist Chicagoans - with the political support over the past decades of neo-conservative republicans and some lobbies. The firsts truly believed (or at least I like to think so) in markets left alone and the trickle-down economics, while the seconds were just doing their job, promoting their own interests at the political level. Soros' principal-agent dilemma argument at the end of the video is perhaps the strongest one... with devastating political implications. I really think he's right when he says that a new era is starting... How to say that... God is dead, Marx is dead, Friedman is dead... and I am not feeling too well, myself.

B:Maybe God is not yet dead.. time and again he's bounced back from near fatality.. and maybe now he's laughing at us and the crass bankers...
but yeah i can't help being shocked at how many billions of dollars governments can instantly pour into the Iraqi war (then) and collapsing banks (now), while the MORE pressing issues of humanity - global poverty and lack of access to basic healthcare and illiteracy - which could be comfortably dealt with by the same amounts of money are conveniently neglected.. even claiming they are too expensive to undertake, or "not in the national interest".
And financial engineering.. can everything always be solved by modelling phenomena? when the same modelling process makes significant assumptions on which variables can be ignored and what can't be.. it's WEIRD how in the very earliest books on economics people like Alfred Marshall had put humanitarian concerns first.. but economics books nowadays resemble mathematical tracts. maybe i'm wrong.

W:I couldn't agree with you more, on every single point! Including the God's laugh...

Then Bing wrote a weighty poetry which I am not attaching now as I'd have to ask him first. However, it's good to remind how Bing and I met each other. We've only seen one night, at St.Gery in Brussels - perhaps during the pub crawl that the author of this blog organized with the rest of the Strangelovers Laison Committee for the new batch of EC trainees. He had come to Brussels to meet a friend he had studied with in Cambridge - physicist as well - who had just started the stage at the Commission. We quickly got into this conversation on how alienating it is the North American way of doing post-graduate studies, and from there we got on pretty quickly on everything, including all difficult things except our favourite Trappist beer. And it is always a great event when you meet such a person.

Warszawa's Island

The Free Form Festival in Warsaw is probably the best atmosphere ever seen in a music festival by the author of this blog. Bands playing and afterwards joining the crowd. An amazing crowd. No judgements. Extraordinary venue (Fabryka Trzcyni - a dismissed brown sugar factory in the outskirts of Praga - the popular and used-to-be-poorest-now-getting-arty district of Warsaw). Excellent choice of bands (considered the small budget), timing of their exhibitions and mix of sounds. Plus, I have been to a few concerts in Warsaw now and have to say that the public in this city is the warmest. And the bands also feel it and play more confidently. Like the Swedish ensamble Koops - after an hesitant start - did yesterday; turning Warsaw into a fantastic Koop's Island.

The Chicagoans Waterloo

I have always been a great estimator of Paul Krugman, this year Nobel Prize in Economics. My thesis started with a quotation of him and I liked the way he wrote, his style, quite unconventional to be an economist, although probably not in absolute terms, as my Canadian room mate Nathan - a sharp policy grad student highly trusted by the author of this blog when it comes to Anglo-Saxon culture - used to complain about his inability to write articles in a decent english...

However, for how much Krugman has criticized the Bush administration since he joined as op-ed the New York Times, I can't forget how much he was radical about the goodness of free trade and globalization when he was an academic, how he regarded it as always good for everyone no matter how, who and when you open to it. Something that could only be true if you see the world under the fundamentalist eyes of the Chicago School of Economics. Those eyes that do not have a clue about what is going on now with the financial crisis and worst of all do not have a clue about how to react. Exactly as the market orthodox elite stood silent and still after the crisis of the 1929.

As at that time it was an Englishman - John Maynard Keynes - who advised the then President of the United States Franklin Delano Roosevelt on how to get out of the mess, this time it was the British prime minister - Gordon Brown - who had the promptness to react firmly and rapidly to the crisis by showing so far the only possible - we can't know if it is the right one yet - emergency exit to the crisis. As the brand-new Nobel Laureate in economics neatly explains here. Probably, the editorial that eventually brought him to an early Nobel Memorial Prize in Economic Sciences.

Hopefully, a first of a long list to "unconventional" economists after a couple of decades of Chicago triumph.

Diego Rivera - Affresco Murario - Detroit Industry, Parete Sud 1932-33.

“In Detroit’s Institute of fine arts there is a remarkable room whose walls are painted with four stunning murals by Diego Rivera. The Rivera murals, completed in 1933, show in considerable detail the operations of Ford’s River Rouge industrial complex – a giant facility that combined at a single site blast furnaces, rolling mills, engine casting, body stamping, and assembly of complete automobiles. … Although Rivera’s murals were intended as a celebration of the power of modern industry (and also, to his patron’s dismay, a condemnation of its brutality), they now have a decidedly archaic feel. Part of that sense of old-fashioned industry comes from the very degree of integration that seemed so impressive at the time. What are all those desperate operations doing in the same facilitiy? Why are they not being done at specialized places scattered around the globe?”
Paul Krugman, “Growing World Trade: Causes and Consequences”, 1995

Fellow citizen Zygmunt Bauman writes for "La Repubblica" on the philosophical roots of the current financial crisis (only Italian Language)

"... L'odierna stretta creditizia non è risultato del fallimento delle banche. Al contrario, è il frutto del tutto prevedibile, anche se nel complesso inatteso, del loro straordinario successo: successo nel trasformare una enorme maggioranza di uomini e donne, vecchi e giovani, in una genìa di debitori. Perenni debitori, perché si è fatto sì che lo status di debitore si auto-perpetui e si continuino a offrire nuovi debiti come unico modo realistico per salvarsi da quelli già contratti. Entrare in questa condizione, ultimamente, è diventato facile quanto mai prima nella storia dell'uomo: uscirne non è mai stato così difficile. ...".

Zygmunt Bauman on La Repubblica (08/10/2008)

You can read the full article here (Italian Language).

Walt Disney and the Subprimes

Last friday, Seb - my officemate at CASE - passed me on a link to the slides below. I am passing on as well. This cartoon on the origin of the financial crisis explains all that economists and business journalists have systematically failed to explain. Plus... these figures bring a great deal of support to a recent thought of mine: the next time I'll have to open a bank account I'd rather ask Walt Disney than a credit rating agency.

The SubPrime Crisis Primer

View SlideShare presentation or Upload your own. (tags: subcrisis subprime)

The IHT writes on the Stage at the European Commission... probably the best stage of the world

Hettie Judah writes about the stagiaires on the International Herald Tribune - the European long-arm of the New YorkTimes.

26-09-2008 - BRUSSELS - On bright evenings in the Belgian capital, the flagstone pavements of Place du Luxembourg are obscured by the kitten heels and polished Oxfords of handsome young people drinking beer.

There's a particular buzz here, present nowhere else in the city; a kind of tribal gathering for dynamic twentysomething Europeans who argue, drink and flirt with an ambitious intensity.

These people are the stagiaires, or participants in a European Union internship program that places 600 graduates in EU governing institutions for five months twice a year.

As a stagiaire, you see Europe as a lifestyle model. You know it's not all about directives and committee meetings but about people having fun together. It's a nice view to remember from time to time when you think it's all just work."

The stage, like travel, can also be broadening. Koch-Mehrin, who during her traineeship met an Irishman who became her husband, credits the experience for giving her a more international perspective.

"As a stagiaire you are curious and try to meet as many different people as possible," she said. "That openness carries on if you come back and continue to work here.

"The stagiaire system started in 1960 with three trainees, but the selection process, rules and payment schedules were not completely formalized until 2005. There are 6,000 to 7,000 applicants for every five-month session, and 90 percent of applicants come from member states of the European Union. ...

You can read the full article here and - if you really want to flirt - you can also apply here.