The Cognitive Dissonance of Goldman Sachs

Interesting article on the AP Newswire today: Emails show Goldman boasting as meltdown unfolds.  I think it represents a case of cognitive dissonance so extreme that to try and justify it rationally only looks absurd -- a viewpoint, I believe, demonstrated by the last two paragraphs of the article (emphasis added):

Goldman said in its 2009 annual report that its short positions sought to offset its long positions in the mortgage market and did not generate large profits. Through 2006, Goldman "generally was long in exposure" in the mortgage-backed securities market, according to the report, and after taking losses on those securities in 2006 it reduced its exposure.

"Although Goldman Sachs held various positions in residential mortgage-related products in 2007, our short positions were not 'a bet against our clients,'" according to the report. 

Of course they were a "bet against [your] clients," Goldman Sachs.  You were making bets in which you won if the housing market crashed, and simultaneously peddling products to your clients in which you assured them that what you were selling were highly rated securities when they were, actually, steaming piles of dog shit.  Now, I'm not saying that Goldman didn't get hit hard by the crash of the housing market -- otherwise they never would have needed to change their status from investment bank to bank holding company in order to gain access to the Fed borrowing window. 

However, even the earlier assertions by their top executives that government funds were never needed to maintain solvency of the firm pale in comparison to their denial of betting "against our clients."  Now, they have crossed the line between unbridled arrogance and a living satire.  Note, I am not making a value judgment on shorting the market while simultaneously recommending their clients to go long -- when the sole pursuit of business is the realization of profit, Goldman was behaving as we should expect a successful firm to behave.  The absurdity is the lengths to which they go to try and deny that they make such a savvy business decision in order to try and maintain at least a facade of legitimacy in the eyes of the public, the veneer of which has long since been stripped.

Perhaps the reason that such things are never stated outright even goes deeper, to the heart of our current system of state-sponsored corporatism or corporate statism, depending upon your point of view.  Perhaps acknowledging the savvy business sense of Goldman's action coupled with the naked immorality of that decision would make too many people question just what kind of values lay at the heart of our FIRE (Finance, Insurance, Real Estate) economy.  Then, they might actually ask if those values aligned with the kind of values we want reflected in our families, communities, and society....

If you're a top Goldman exec or other member of the financial services elite, you can't have the "rabble" asking such questions.  Otherwise, they might just wise up and ask what they need an industry based upon predatory, bloodsucking behavior for -- especially when they increasingly seem as if their success is built on the back of making life more difficult for a growing proportion of the populace.

Dick Cheney endorses Marco Rubio immediately following allegations of corruption

From the "you can't make this shit up" file, here's an interesting paragraph out of an AP article today:

Former Vice President Dick Cheney was the latest to give his support Thursday, a day after [Marco] Rubio repaid Florida's Republican Party $2,417 for double-billed flights, an expense he blamed on an accounting error he discovered after the first of several stories on the flap appeared a few weeks ago in The Miami Herald and the St. Petersburg Times.

 So, let me get this straight -- the former VP, CEP of Haliburton and Defense Secretary Dick Cheney, the same Dick Cheney that was at the heart of so many nexuses (is it nexuses or nexi?) of corruption between the public and private sectors, endorses Marco Rubio AFTER he is implicated in several ethics scandals?  It does seem that the universe has a sense of humor, after all....

Another example of the disintegration of the center, from FPR

It's almost as if things have come full-circle.  Where I once traveled in decidedly left-wing political circles, I have come to greatly appreciate -- nay, rely upon -- the work of the more conservative intellectuals at Front Porch Republic.  I don't frequent them in order to find an echo chamber, unlike the more prevalent tendencies in the American populace.  I go there because it: 1) Intellectually challenges my own convictions and perspective, which is more on the left than the right, and 2) Demonstrates frequently and repeatedly areas for broad cooperation between people on the left and right who still believe in antiquated notions of discussing ideas civilly and rationally -- but still passionately.  In that way, they are a refreshing antidote to the mind-numbing monotony of beltway gossip and public relations generated talking points repeated ad nauseum that is offered by our mainstream outlets.  D. W. Sabin's piece, "The Duma on the Potomac, for the Greater Glory of Government," provides a good example of this.

Truth be told, I was hooked on Sabin's piece from the start:

Ambrose Bierce, in his magnificently arch “Devils Dictionary” defined a Conservative thusly: Conservative, n. A statesman who is enamored of existing evils , as distinguished from the liberal, who wishes to replace them with others”. 

Anything that starts off with an acerbic quote that immediately sets such a deliciously cynical "pox on both your houses" tone... well, I guess you could say that my curiosity is always piqued.  But all joking aside, Sabin hit something later that really made me think and reflect:

Meanwhile, the frustrations of being forced to watch a slow-motion train wreck are resulting in a splintering of the slap-happy Grand Old Party into renegade bands of Mensheviks and Bolsheviks. The American Mensheviks have their Trotsky in the Big Government Neo-Conservatives who wish for progress but only that kind of progress which will maintain the existing forms of government modified, of course, in their world-transforming image. The American Bolshys , on the other hand, are the mad-as-hell Tea Party with their sexpot Lenin Sarah Palin, fresh from cash-cow book tour and on a First Class Junket into Everyday Celebrity. These two “revolutionary” combatants against the evil Liberal gentry will now duke it out with a wrestling card of opinion that is sure to be exciting, while their opponents in the Intelligentsia will continue to concoct a thinly veiled bunko in the general schemes of space travel, democracy at gunpoint and fiat money economic legerdemain. The Show Must Go On.

One thing is certain, like in Russia during the last gasp of the Tsars, Terror will be ever-present, although its perpetrators shall be few and at the end of the day, the raznochintsy will still be “the people of no worth.”

The other day, I overheard President Obama as he held forth on the potentials of our storied Space Program. He announced that he intended to hand the low earth orbit taxi service concession over to our Cosmonaut friends in Russia while applying our own efforts to heavy cargo lifting for exploration deeper into space, concurrent with the development of commercial earth orbit space transportation. In his remarks, he declared without a hint of irony that he wanted America to not only embrace the future but to actually “leap into the future”. Stirring words perhaps, redolent of the Kennedy through Nixon effort to land an American on the Moon but amidst the current economic crisis , the idea that we might like to “leap into the future ” seems downright escapist if not wholly comic. I can hear the Exceptionalists and Positivists grumbling now that I am resorting to a retreat from our technological abilities and embracing American Decline. I am doing nothing of the sort, I’m simply acknowledging the very clear signals that we have not yet reached such an exalted state that would merit the idea of decline from it. The flesh is willing but the spirit is dead and buried.

I recently completed reading Joseph Tainter's The Collapse of Complex Societies, a very densely and scholarly written, yet wonderful book that specifically targets the pattern of collapse in ancient civilizations as different as the Western Roman Empire, the Maya and the Chacoans of the American Southwest.  Now, I'm grossly generalizing here, but basically Tainter's conclusion (based on archeological study compared to current demographic trends) is that all complex societies are eventually done in by the patterns that fueled their rapid growth, because those patterns offer diminishing -- and eventually negative -- marginal returns on all investments of energy.  The simplest example is in terms of military conquest -- initial conquests are close to home and offer a flood of new resources, making the conquest able to pay for itself and then some.  However, continued expansion eventually hits up against the wall of becoming prohibitively expensive and difficult to carry out, and even the maintenance of conquered lands provides a growing drain on the investment against declining yields.  Finally, the centralization of power that develops out of the need to effectively administer larger amounts of territory begins to lose legitimacy as it proves increasingly incapable of addressing the diminishing returns of expansion and complexity.  In short, the center no longer holds.

What does all of this have to do with Sabin's article?  I think that by questioning the very notion that we are in a Golden Age right now, and instead looking at the current American manifestation of Western Civilization as something far less from grand in a spiritual (in the broadest form) sense, Sabin is demonstrating what happens when the center is seen as no longer holding.  What we get are not battles of rhetoric and ideas, but clashes of hardened ideology (as in the neo-cons vs. the tea party crowd over the soul of the Republican Party, or the "conservatives" vs. "liberals" over what brand of evil we are going to more readily embrace, old or new).

It also informs our reading of Tainter's work, especially as to what else we should expect if the disintegration of the center is a presage of a broader "collapse" of the way of life we are all accustomed to experiencing.  The real question then becomes, what kind of institutions will be formed out of the scrap heap of the old ones?  Will they be a potemkin prosperity for an increasing few, a broad and deep raznochintsy ("people of no worth"), and power structures that rely upon direct coercion to maintain such high levels of inequality?  Or will we instead answer to the "better angels of our nature" and create something of lasting beauty out of the wreckage?  I know which way my rational sense tells me, but nevertheless I have to remain hopeful because, if hope is lost, then what is the point?

Human Extensions of Our Machines

A couple of weeks ago, I was watching an interview with one of my favorite bloggers, John Michael Greer (The Archdruid Report) on Peak Moment television.  And, like most of the time I'm exposed to Greer's thinking, there was something that really made me stop and think.  I've copied that section from the transcript below.  You can find the entire interview -- video, audio and transcript -- at http://www.energybulletin.net/media/twilight-age#transcript

(John Michael Greer): One of the things about the age of cheap energy is that it’s made us think that, it’s made us ignore our own capacities, our own potentials as human beings, and encouraged us to focus instead on what we can make machines do. And on the one hand that leads to ignoring a lot of our potential as human beings, but it also leads to a very specific kind of thinking in terms of power relationships. You don’t have a conversation with your car or with your alarm clock…you tell it what to do. And what it doesn’t do exactly what you do you get grumpy, and you take it to the repairman or you throw it out and buy a new one. You don’t converse with it, you don’t live with it you don’t…

(Janaia Donaldson): You don’t work things out…

(JMG): There’s no negotiation, there’s no sharing, there’s no community…

(JD): Right, that’s true.

(JMG): And so it’s encouraged a very mechanistic attitude that we apply to ourselves, we apply to each other, we apply to the living earth that supports all of our lives. And it’s not been…I mean it’s had some very negative consequences. One of the things that we need to reacquaint ourselves with is the fact that our own capacity…I mean human beings have enormous capacities that we’ve left unused for 300 years. And we need to reacquaint ourselves with our own capacities, with our own innate human abilities to do a whole range of things. We are actually, you know, we are a very successful life form. We’ve got a lot of capacities that we’ve evolved down through millions of years and we need to put those to work rather than just running to a machine. And, on the one hand that’s all we’ve got left now, is ourselves. On the other hand, I’m not sure we actually need that much more than ourselves and each other, and of course the natural world that supports our lives.

Whether you agree or disagree with Greer's ideas about a post-industrial future, I think he's on to something quite significant here regarding to the way that human relationships have changed with the introduction of cheap energy.  The most obvious in a historical sense, at least from my perspective, is the introduction of Taylorism (the ideas of scientific management of the workplace introduced by Frederick Taylor in the late 19th and early 20th century).  In the crudest sense, Taylorism sought to remove every last trace of humanity from the factory.  Assembly-line tasks were broken down into specific movements made by workers to perform each task, and a time value in seconds or even fractions of a second was assigned to each movement.  If employees were tired from working on the factory floor for fourteen hours with only twenty minutes for lunch and two ten-minute bathroom breaks, it did not matter.  According to the principles of Scientific Management, they should be performing their tasks within the same amount of time.

While humans have used machines to complete tasks throughout all of our history on this earth, starting with the use of rocks by the earliest hominids, at all times those machines were an extension of our human selves.  Cheap energy and industrialism, however, sought to reverse this relationship.  According to Taylor and the factory operators who followed his advice, human workers were to become extensions of the machines they operated.


This attitude, Greer points out, has now spilled into our personal relationships as well.  One reason behind a divorce rate that hovers around 50% could be the changes in the way we relate to each other.  I came across an article in Psychology Today a few weeks back that addressed this high divorce rate and, more importantly, how to avoid being one of those failed relationships contributing to it.  The main point of the authors was that many of us get married expecting our spouse to be everything that we are looking for, and often without much time or effort put in on our part.  When our spouses fail to live up to our lofty expectations, we convince ourselves that the cause of our unhappiness lay in them, and that the "perfect person" is still waiting for us out there to fulfill all of our needs.  The authors of the article write that this way of thinking is rooted in our world of nearly limitless choices.  I think they're right, but they still tread too near the surface.  Our modern world of limitless choices is a product of cheap, abundant energy and the mass-production through machines that it powered.  In a world of abundance, there no longer has to be any negotiation, any compromise -- when someone fails to meet your expectations, they can be thrust aside in favor of others who can better make us happy...  until, after a certain amount of time, when we realize that the second person is also less-than-perfect, and the cycle repeats itself and leaves us consistently unfulfilled.

This "industrial conditioning" has manifested itself in our politics as well.  While people have always divided over issues, ideas and worldview since the beginnings of complex civilization, our modern society has taken this to the extreme.  People of differing viewpoints can choose to avoid interacting with each other now, even to the point of completely avoiding exposure to other viewpoints, where before their physical and social proximity often meant that they had to negotiate and compromise.  The result is a completely polarized politics in which opposing camps claim the mantle of their own ideological purity and level charges of the unquestionably evil intentions at their opponents.  In this game, there is never any "working it out" -- instead, success is portrayed as occurring only if "my side" is able to enact its agenda completely and fully, and  the "other side" is completely marginalized or even purged from the political process (or, in the more extreme instances, literally purged from society).

So, what does this all mean in the grand scheme of things?  In the current sense, it means that we have abandoned the kinds of negotiation and compromise that was necessary for human relationships and, by extension, survival, for a mechanistic kind of thinking in which other people exist only to meet our needs, much as our machines do.  If we do face a difficult, industrialized future based upon declining supplies of fossil fuels and a more unpredictable and unstable climate and environment, such an approach will not work.  Cooperation and community, as Greer pointed out, are not the result of treating people like machines.  They are the result of learning to get along with others and accepting the ways in which they differ from us -- because in the end analysis it is the common ground, the end result of negotiation and compromise, that has ensured our survival as a species for all but the last 0.1% of our existence on this planet.