Today’s Reading

The Quiet Coup:

In my view, the U.S. faces two plausible scenarios. The first involves complicated bank-by-bank deals and a continual drumbeat of (repeated) bailouts, like the ones we saw in February with Citigroup and AIG. The administration will try to muddle through, and confusion will reign.

Boris Fyodorov, the late finance minister of Russia, struggled for much of the past 20 years against oligarchs, corruption, and abuse of authority in all its forms. He liked to say that confusion and chaos were very much in the interests of the powerful—letting them take things, legally and illegally, with impunity. When inflation is high, who can say what a piece of property is really worth? When the credit system is supported by byzantine government arrangements and backroom deals, how do you know that you aren’t being fleeced?

Our future could be one in which continued tumult feeds the looting of the financial system, and we talk more and more about exactly how our oligarchs became bandits and how the economy just can’t seem to get into gear.

The second scenario begins more bleakly, and might end that way too. But it does provide at least some hope that we’ll be shaken out of our torpor. It goes like this: the global economy continues to deteriorate, the banking system in east-central Europe collapses, and—because eastern Europe’s banks are mostly owned by western European banks—justifiable fears of government insolvency spread throughout the Continent. Creditors take further hits and confidence falls further. The Asian economies that export manufactured goods are devastated, and the commodity producers in Latin America and Africa are not much better off. A dramatic worsening of the global environment forces the U.S. economy, already staggering, down onto both knees. The baseline growth rates used in the administration’s current budget are increasingly seen as unrealistic, and the rosy “stress scenario” that the U.S. Treasury is currently using to evaluate banks’ balance sheets becomes a source of great embarrassment.

Under this kind of pressure, and faced with the prospect of a national and global collapse, minds may become more concentrated.

The conventional wisdom among the elite is still that the current slump “cannot be as bad as the Great Depression.” This view is wrong. What we face now could, in fact, be worse than the Great Depression—because the world is now so much more interconnected and because the banking sector is now so big. We face a synchronized downturn in almost all countries, a weakening of confidence among individuals and firms, and major problems for government finances. If our leadership wakes up to the potential consequences, we may yet see dramatic action on the banking system and a breaking of the old elite. Let us hope it is not then too late.

What’s the Ideal Number of Friends:

“You can have friends because of what you do together or enjoy something together like football or shopping, but they’re not as profound friends as those who you love for themselves because of something in their character. And it doesn’t matter what you’re doing with them, even sitting alone in a room.”

There’s a limit to how many close friends like this you can have and it’s probably between six and 12, he says.

Cathy Caruth on Hannah Arendt on Lying, War, and Testimony:

Arendt draws on a number of examples, remarking, for instance, on the disappearance of Trotsky from the history books of the Soviet Union, and the German and French representations of their actions during World War II. Unlike the ancient world in which the notion of politics first appeared, she suggests, the public realm in the modern world is not only the place of political action that creates history but also, and centrally, the place of the political lie that denies it. Focusing on the ubiquity of the lie in the modern world, then, Arendt ultimately, in my interpretation, asks the following question: what kind of politics is possible in a world in which history is regularly and systematically denied? 

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