Forum Archive Index - April 2001

["Ian Andrews" <iandrews@ihug.co.nz>]

> >
> >REMARKS TO THE COMMITTEE FOR
> >MONETARY RESEARCH AND EDUCATION
> >The Union Club, New York City, April 4, 2001
> >
> >By Anne Williamson
> >
> >When CMRE President Elizabeth Currier and I first
> >discussed what issue I might like to address this
> >evening, times were different. Investors still had hope
> >that the "Greenspan Put" would make matters right
> >again. Back then a discussion of Bubblevision's
> >cheerleading struck me as an interesting theme. But as
> >I said, times have changed. And though nothing like
> >capitulation has taken hold, the herd is stirring. So
> >it's time to stop clapping for Tinkerbell, and for us
> >all to go bottom fishing.
> >
> >Sharp traders avail themselves of many tools when
> >attempting to discern and interpret market signals --
> >charts, graphs, indexes, moving averages, assorted
> >market theories, palm readers, whiskey and rye, and so
> >forth. I have no useful comment regarding these
> >methods, because I use something altogether different,
> >something that might surprise you.
> >
> >But before revealing the method to my madness, I want
> >to share with you an anecdote from my years at
> >university. When I was but a young and winsome girl --
> >listen to the wind blow, fellas -- and first getting a
> >grip on the proper trilling of the Slavic "R" while
> >puzzling over the complexity of glagolii dvizheniye,
> >myakii znaks, and predlogiis, I was required to take a
> >course called "How to Read a Russian Newspaper."
> >
> >That struck me as odd. After all, if one could master a
> >foreign language, wouldn't it follow that reading a
> >newspaper would be a natural act that did not require
> >any particular study?
> >
> >Well, yes and no. You see, Soviet newspapers had a
> >particular set of challenges for students of the
> >Russian language. These challenges were ideological in
> >nature, and so the course about reading Russian
> >newspapers was really a course in learning Soviet
> >"code."
> >
> >For instance, we learned such curious things as that
> >the phrase "cosmopolitan elite" meant "Zionists," and
> >that it was not permitted for the word "crisis" to
> >appear in any sentence or headline with the word
> >"Komsomol" -- "Young Communist League."
> >
> >We might laugh today, but I could teach the same sort
> >of course starting tomorrow to students of the English
> >language. And no better text could I have than The New
> >York Times, which, like the Fed, is a quasi-public
> >utility, giving each of us daily all the news America's
> >Ivy League socialists think we are fit to have.
> >
> >After reading an article entitled "Following the Money,
> >But Also the Mind," in the Feb. 11 issue of the Sunday
> >New York Times, it was clear to me something wicked was
> >coming this way, and that the predicate for a
> >beguilement was being laid. I speak of course of a new
> >discipline, "behavioral economics." Quoting from the
> >article:
> >
> >"Behavioral economists help to explain how booms
> >persist while busts are difficult to reverse. Their
> >research sheds light on why identity -- the traits
> >people assign to themselves and to others -- plays a
> >huge and often damaging role in the economy."
> >
> >I shudder to think of the implications of American
> >socialists applying identity politics to economics. But
> >here's the key point:
> >
> >"And if the behaviorists prevail, the mainstream view
> >of a rational, self-regulating economy may well be
> >amended and policies adopted to control irrational,
> >sometimes destructive behavior. Twenty-five years of
> >deregulation might lose its appeal."
> >
> >I confess that in reading this article I was tempted to
> >think that history really does have a plan. After all,
> >the Ivy League's former heroes, the "quant jockeys" --
> >those neo-Keynesians who believe that all relevant
> >human action can be reduced to a mathematical formula
> >-- had been busy at taxpayers' expense foisting their
> >destructive and deceptive theories upon innocent people
> >around the world for over a decade. The subsequent ruin
> >of many a foreign country on the basis of their
> >miserable, ill-considered advice can be witnessed to
> >this day in Asia, Russia, Eastern Europe, and Latin
> >America.
> >
> >But I fear that the most long-lived legacy of these
> >economists is the intellectual deceit in which they
> >engaged. While employing only the rhetoric of free
> >markets, and not the true methods of economic liberty,
> >they were in fact dispensing statism and cronyism.
> >
> >There's nothing "free market" about IMF subsidies to
> >corrupt regimes, about privatization in the absence of
> >property rights, about the extension of the U.S.'s
> >lunatic tax regime abroad, about the funding of state
> >gangsterism with other people's money, nor about the
> >establishment of paper currencies whose true lifeblood
> >is the printing press. All that is not even Keynesism,
> >but instead pure economic predation of the sort all
> >empires have engaged in since time immemorial.
> >
> >And so the Ivy League's quant jockeys sallied forth,
> >their pockets stuffed with dollars to bring devaluation
> >and market collapse to tens of millions of people. What
> >they hadn't counted on was that the host country of
> >their presumed empire would, in time, experience the
> >same miserable result in a global boom gone bust. Today
> >Americans are faced with collapsing share values, and,
> >as a consequence, the cancellation of credit cards, the
> >foreclosure on loans extended for the purchase of homes
> >and automobiles, of corporate layoffs and of factory
> >cutbacks and/or relocations abroad to venues with lower
> >labor costs.
> >
> >These results are not the "new era" goods the Ivy
> >League's quant jockeys have been advertising these many
> >bubbly years.
> >
> >In the certain absence of apology or remorse, what's
> >their defense to be?
> >
> >I think we can all guess, even without the assistance
> >of The New York Times or the Ivy League's newest
> >generation of economists, the behaviorists. Clearly,
> >the defense of lamestream academics is that the problem
> >lies not with their theories nor with the greatest
> >expansion of cash, credit, and government favor in
> >world history, but with the people. Greed, most
> >especially that of the people, is the problem, they
> >will say. Just this morning did Steven Rattner of the
> >investment firm Quadrangle Group lay it out for us on
> >the Times's op-ed page. Here's what Mr. Rattner had to
> >say:
> >
> >"We cannot expect miracles from the Fed, but only the
> >slow salve of interest rates gliding prudently down.
> >Instead of blaming Mr. Greenspan, we should reflect on
> >the willing suspension of disbelief that allowed us to
> >ignore everything we have been taught about sound
> >investing. We brought this period of drying out upon
> >ourselves."
> >
> >In other words, it's our own fault. Gee, and this from
> >the same crowd who has for years been hailing the
> >American consumer as the savior of the international
> >economy.
> >
> >I resent the new propaganda's rationale as much as I
> >resented the false promises of a "new era." I resent it
> >as much as I do Robert Shiller's very good book,
> >"Irrational Exuberance," which -- after roaming far and
> >wide through media and psychology for 233 pages --
> >devotes but one page and four lines to the subject of
> >monetary policy and speculative bubbles. Therein
> >Professor Shiller informs the reader that the genesis
> >of a speculative bubble is "a long, slow process,
> >involving gradual changes in people's thinking." Not a
> >word about the irresponsible expansion of money and
> >credit that are the very stimuli that lead to those
> >very "gradual changes in people's thinking."
> >
> >A great silence is what all these behaviorists share.
> >Not a one of them will discuss the true source of
> >bubbles, panics, and manias, which is not a predictably
> >responsive human psychology, but rather the secret and
> >destructive operations of a central bank.
> >
> >To these men I say: Banks and citizens did with money
> >what they are supposed to do; they invested it. Just
> >because the money monopolists and their spokesman do
> >not address the Federal Reserve's having been engaged
> >in a money-printing mania does not make it any less
> >true.
> >
> >Yet how convenient it is that the Ivy League now has a
> >small squandron of new theorists at the ready to
> >explain to the rest of us our stupidity and cupidity.
> >The implication is that they themselves -- the global
> >managerial class that itself is so very redolent of
> >Milos Djilas's "new class" -- are like gods, and if we
> >but listen to them and follow their edicts, all will be
> >well.
> >
> >I assume they mean that all will be well just as it was
> >in Thailand, the Phillipines, Indonesia, South Korea,
> >Russia, Brazil, Argentina, and Turkey.
> >
> >I shake my fist in their collective face.
> >
> >The truth is that wealth -- real wealth that serves all
> >men in all places at all times -- is created for the
> >most part by people who do not speak second languages
> >and are not members of any faculty club. Educated or
> >not, and if American they are largely illiterate
> >nonetheless, for the most part they dress badly and
> >frequently have dirty fingernails. Their lives are
> >subject to all the disorder the raw impulses of human
> >nature compels.
> >
> >But it is they who pour the steel, mine the earth's
> >treasures, bake the bread, and lay the bricks of the
> >very structures that support the fragile civilization
> >we still enjoy, however tenuously. We mock them and
> >their efforts to provide for themselves and their
> >families at our peril. It is they -- the mass of
> >humanity -- upon whom all of us must rely for
> >civilization's future, and when the greater of us suck
> >dry the lesser of us, we debase both ourselves and our
> >shared future.
> >
> >The simple truth is that until we free money creation
> >from the manipulative hands of a self-proclaimed elite
> >and return government to its proper role as the
> >regulator of weights and standards -- and I do use
> >those words symbolically -- everything we treasure as
> >individuals and as a people is at risk.
> >
> >And so when you read in The New York Times, as you
> >increasingly shall in coming days, of the behaviorist
> >economists, when their as-yet-obscure names are the
> >stuff of talk shows, scholarly journal articles, and
> >think-tank manifestos, only then will you be able to
> >say we've found the bottom.
> >
> >After all, it's a tricky matter to decide at which
> >exact point the zeitgeist is to change from hailing
> >consumers as heroes to denigrating them as greedy
> >fools. The process of wealth destruction now afoot on
> >Wall Street will guide the media; they'll figure it
> >out, and they'll let us all know long after most of us
> >have stopped caring. And, again, that's when you'll
> >know the market has found its bottom.
> >
> >I just hope that when we all get there, there's a drop
> >of liberty left.
> >
> >In the meantime I'll keep praying that those human
> >bricks of civilization -- the toiling mass of mankind
> >-- are wise enough to resist the siren call of their
> >betters, who will surely be promising falsely a
> >perpetual security in return for the last of our
> >freedoms.
> >
> >-END-
> >
> 
> _________________________________________________________________________
.
> 
> 



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