Comments posted in Malaysia Today on reports after the 2008 general elections of Perlis Sultan's insistence that all MPs appearing before him must wear the Songkok (Malay hat), and some DAP reps' refusal to comply.
A storm in a songkok
1st comment:
Much ado about what covers the head when what is needed for the country is to enlighten that which the hats cover.
Throughout history, all cultures (political and religious) in power deemed themselves honoured when their subjects are made to wear their costumes. What got to be put on the heads was apparently especially important to those 'powerful' people of the dark ages whether they were from Europe, Middle East or Asia.
As an example, to the arrogant Manchu rulers of China a century or so ago, their mandatory 'pig tail' hairstyle was the epitome of their overlordship (they had their own NEP system too) and was to be compromised only at the price of the head. The Qing, of course, gained more lasting infamy than respect from that antic of theirs.
The 'songkok' is, of course, something some people copied from the Turks.
History seems to show that it is the arrogant vile that feel most honoured if others ape after them, and feel most exalted by their one-size fits all version of 'only my way or nothing'. The US of George Bush Jr. is just the latest ‘global’ version of such arrogance.
Today we see first hand how our own version of such a 'My Way' attitude by an M character had created the Malaysian Dilemma. Forcing others to wear his stupid notions in their head is far worse than that of forcing outfits on others, but they all have small beginnings.
It may start with a book, a hat, or a megalomaniac's dream.
xxx
Subsequent posts (as web arguments on whether the DAP reps should or should not have submitted to the Songkok-or-nothing rule):
People can choose to have fun with others' costumes but they should not get to choose to have fun with others' liberty.
xxx
One can put whatever one likes on one's own head based on whatever reasons one can find or dredge up. One should however not think that one had it all sorted out and thereforth to insist that all others should ape after him.
It is perhaps better that one knows where to cap it all off.
And do you think that unto such as you;
A maggot-minded, starved, fanatic crew:
God gave the secret—and denied it me?
Well, well, what matters it? Believe that, too.
- Rubaiyat, Omar Khayyam
xxx
Friday, March 21, 2008
Various Postings on Malaysian Indians
Comments posted in Malaysia Today before the 2008 general elections on 8 March 2008 in which the opposition parties won more than 1/3 the Parliamentary seats and became states government for Kedah, Penang, Perak and Selangor for the 1st time.
Suara rakyat, suara keramat
The Malaysian Indians suffered from a combination of factors.
Culturally they are a people conditioned to accept whatever life has to offer. They call that fate. Which is why their Hindu caste system lasted for a few thousand years and still going.
The Hindu caste system also conditioned them subconsciously to submit blindly to whoever happens to be in position of power. Thus their past faithfulness to Samy Vellu and BN.
In our country, Indians had also been conditioned to submit to the Malaysian caste system where they are further placed below some other people that have 'special positions'.
All these had combined to instill in the least well-to-do segments of Malaysian Indians (which is the majority) an inferiority complex worse than that created by their Hindu caste system.
If Malaysian Indians had failed, it is because our country had failed them and made them feel worse than what their disastrous caste system had done.
If Malaysian Indians had failed, it is because our country had intentionally kept them down by forsaking or letting them forsake their children's education.
It is only through education and, thereof, the opportunity to partake in all the best opportunities the country and the world has to offer (this means equality and meritocracy), that Malaysian Indians can get out of the rut that their own culture and government had created for them.
It should pain all compassionate Malaysians to see those pictures of our Tamil schools operating out of huts and 2-storey shop houses.
It is clear that the Indian community is too poor to start with to have much opportunity to get out of their hole themselves.
For one, they are now lower down in the Malaysian caste system than they had ever been in history, and cannot feed off others by the wave of a straight or crooked knife.
Just as their Hindu caste managed to keep their lowest members perennially subservient by keeping them continuously desperate, with whatever time they have spent on struggling to just survive not to say to figure out who among their leaders (all predators) were lying to them, the Malaysian caste system had done the same and worse with the help of a certain MIC and Samy Vellu.
The Indians may also be spread too thin to be able to run their Tamil schools cost effectively.
And if this country's government cannot or do not wish to uplift the Malaysian Indians who are unlikely to do so on their own, then the good people of the other races should extend a helping hand instead of talking to them condescendingly.
Going to so-called 'national' schools may also not be the solution as is obvious to anyone with some insight, including the discerning Malays who send their children to Chinese schools (even Mahathir talked about it when they were calling for his head).
The Chinese schools, on the other hand, have more critical mass (that is before a certain group of ‘special viles’ chase them out or kill them off with crooked knives), and the right people and value system to do that.
So I suggest that Indian and Chinese educationists consider the option of bringing the Indians into the fold of the Chinese school system/network.
If any group of people is able to do that, it is these 2.
Come on Indians and Chinese Malaysians, you have not much more to lose but all the more to gain by coming together, starting with our children and by imparting to them the knowledge and skills to compete successfully anywhere on earth, whatever dirt-princes notwithstanding.
2 people from 2 of the largest and greatest civilizations in history can surely find the space in our hearts and our schools to keep ourselves and our great cultures (except the Hindu caste system, of course) standing together upright against the odds posed by the vile predators that lord the Malaysian caste system.
xxx
Theva's desperate plea
Malaysia's middle class Indians can be ignored but there is more at stake than just votes
----
It is true that more than just votes is at stake but it is not true that Malaysia's Indian middle class can be ignored just because their numbers are small.
If number is all that matters in the advancement of the human race and in national development, then Malaysia should be lording over Singapore by now and Indonesia over Malaysia.
The truth is only a small number of minds really makes a difference in this world.
The rest are mere followers and hitch-hikers. Some are worse than that, as Malaysia show abundantly.
Although only a few really makes a difference, no one can ever foretell who those few will be and where they will come from.
Thus the need to give every single deserving individual the best opportunity they deserve to grow, and not waste resources on the undeserving. That is meritocracy.
The 7% Malaysians who are Indians may be small in number but we should be mindful that among all the races in Malaysia, that race have produced the largest number of Nobel prize winners. (Globally, there have been 6 ethnic Indian winners, 5 Chinese, and 0 Malays)
Some Malaysian races can claim to be princes of some soil or dirt, but none other than the Indian race in Malaysia can claim the honour of being awarded with the most Nobel prize.
It is perhaps timely to remember Chandrasekhar Subramanyam, the physicist from an Indian middle class family whose work was once publicly insinuated by his white mentor in front of a gathering of the Royal Astronomical Society.
None of the established European physicists of that time came to that young man's rescue.
One reason was that white mentor held the title of ‘father of modern astronomy’ and had arrogantly claimed that he was only 1 of 3 men in the world at that time that understood Einstein's theory of relativity. His name was Arthur Eddington.
The Nobel Prize committee was not impressed with Eddington but gave Chandrasekhar a Nobel prize for his work (on what became known as 'Chandrasekhar Limit') that arrogant Eddington scoffed at.
Chandrasekhar's uncle C.V. Raman was also a Nobel prize winner for his work on the Raman Effect (Physics).
Now, what race, not to say middle class family, can claim the honour of having 2 Nobel prize winners in 2 generations?
So Malaysian Indians,
Some people in Malaysia may look down on you or scoff at you but they will never be able to get anywhere near the achievements of your race.
Your people's achievements is Nature's way of showing you promise. And hope.
So hold your heads up high. Only fools ignore you to their own loss and detriment.
xxx
Malaysian Indian Muslims want to be called Malays
Kuala Lumpur, Mar 3 2008: Members of the Malaysian Indian Muslim Youth Movement (Gepima) want to be known as Malays and not Indians.
----
In the 19th century the western countries led by the British forced the Chinese to allow the sale of opium and made a lot of gold/money selling opium derived from India and Afghanistan (the British called that dominion 'the Jewel of the Crown').
At the same time their religious groups offered food and money (subsidised by that opium money, mainly) to any Chinese willing to convert to Christianity.
To the more humane in the west, the view was Christianity would humanise and civilise the Chinese.
Others like a British poet, Rudyard Kipling, considered the Asiatics and Africans (regions the west were fighting to colonise then) 'A Whitemen's Burden'.
And Kipling's poem of that name called upon the Americans to join the British in colonising these regions filled with 'half-devil and half-child'.
That poem was written when the Americans had whacked and taken possession of all Spanish dominions in the Americas and Pacific, and was occupying the Philippines.
Faced with the generosity of money derived the opium sale (so it was really money from the Chinese themselves) and the ineptitude of their own government, many of the poorest and desperate Chinese then took up the conversion offer to survive.
The other Chinese called the conversions 'shi jiao' or literally 'eating religion'.
The Indians of Gepima may also be just wanting to 'eat race'.
But are the people they want to join that generous, or would they just treat them as half-devil and half-child?
xxx
Suara rakyat, suara keramat
The Malaysian Indians suffered from a combination of factors.
Culturally they are a people conditioned to accept whatever life has to offer. They call that fate. Which is why their Hindu caste system lasted for a few thousand years and still going.
The Hindu caste system also conditioned them subconsciously to submit blindly to whoever happens to be in position of power. Thus their past faithfulness to Samy Vellu and BN.
In our country, Indians had also been conditioned to submit to the Malaysian caste system where they are further placed below some other people that have 'special positions'.
All these had combined to instill in the least well-to-do segments of Malaysian Indians (which is the majority) an inferiority complex worse than that created by their Hindu caste system.
If Malaysian Indians had failed, it is because our country had failed them and made them feel worse than what their disastrous caste system had done.
If Malaysian Indians had failed, it is because our country had intentionally kept them down by forsaking or letting them forsake their children's education.
It is only through education and, thereof, the opportunity to partake in all the best opportunities the country and the world has to offer (this means equality and meritocracy), that Malaysian Indians can get out of the rut that their own culture and government had created for them.
It should pain all compassionate Malaysians to see those pictures of our Tamil schools operating out of huts and 2-storey shop houses.
It is clear that the Indian community is too poor to start with to have much opportunity to get out of their hole themselves.
For one, they are now lower down in the Malaysian caste system than they had ever been in history, and cannot feed off others by the wave of a straight or crooked knife.
Just as their Hindu caste managed to keep their lowest members perennially subservient by keeping them continuously desperate, with whatever time they have spent on struggling to just survive not to say to figure out who among their leaders (all predators) were lying to them, the Malaysian caste system had done the same and worse with the help of a certain MIC and Samy Vellu.
The Indians may also be spread too thin to be able to run their Tamil schools cost effectively.
And if this country's government cannot or do not wish to uplift the Malaysian Indians who are unlikely to do so on their own, then the good people of the other races should extend a helping hand instead of talking to them condescendingly.
Going to so-called 'national' schools may also not be the solution as is obvious to anyone with some insight, including the discerning Malays who send their children to Chinese schools (even Mahathir talked about it when they were calling for his head).
The Chinese schools, on the other hand, have more critical mass (that is before a certain group of ‘special viles’ chase them out or kill them off with crooked knives), and the right people and value system to do that.
So I suggest that Indian and Chinese educationists consider the option of bringing the Indians into the fold of the Chinese school system/network.
If any group of people is able to do that, it is these 2.
Come on Indians and Chinese Malaysians, you have not much more to lose but all the more to gain by coming together, starting with our children and by imparting to them the knowledge and skills to compete successfully anywhere on earth, whatever dirt-princes notwithstanding.
2 people from 2 of the largest and greatest civilizations in history can surely find the space in our hearts and our schools to keep ourselves and our great cultures (except the Hindu caste system, of course) standing together upright against the odds posed by the vile predators that lord the Malaysian caste system.
xxx
Theva's desperate plea
Malaysia's middle class Indians can be ignored but there is more at stake than just votes
----
It is true that more than just votes is at stake but it is not true that Malaysia's Indian middle class can be ignored just because their numbers are small.
If number is all that matters in the advancement of the human race and in national development, then Malaysia should be lording over Singapore by now and Indonesia over Malaysia.
The truth is only a small number of minds really makes a difference in this world.
The rest are mere followers and hitch-hikers. Some are worse than that, as Malaysia show abundantly.
Although only a few really makes a difference, no one can ever foretell who those few will be and where they will come from.
Thus the need to give every single deserving individual the best opportunity they deserve to grow, and not waste resources on the undeserving. That is meritocracy.
The 7% Malaysians who are Indians may be small in number but we should be mindful that among all the races in Malaysia, that race have produced the largest number of Nobel prize winners. (Globally, there have been 6 ethnic Indian winners, 5 Chinese, and 0 Malays)
Some Malaysian races can claim to be princes of some soil or dirt, but none other than the Indian race in Malaysia can claim the honour of being awarded with the most Nobel prize.
It is perhaps timely to remember Chandrasekhar Subramanyam, the physicist from an Indian middle class family whose work was once publicly insinuated by his white mentor in front of a gathering of the Royal Astronomical Society.
None of the established European physicists of that time came to that young man's rescue.
One reason was that white mentor held the title of ‘father of modern astronomy’ and had arrogantly claimed that he was only 1 of 3 men in the world at that time that understood Einstein's theory of relativity. His name was Arthur Eddington.
The Nobel Prize committee was not impressed with Eddington but gave Chandrasekhar a Nobel prize for his work (on what became known as 'Chandrasekhar Limit') that arrogant Eddington scoffed at.
Chandrasekhar's uncle C.V. Raman was also a Nobel prize winner for his work on the Raman Effect (Physics).
Now, what race, not to say middle class family, can claim the honour of having 2 Nobel prize winners in 2 generations?
So Malaysian Indians,
Some people in Malaysia may look down on you or scoff at you but they will never be able to get anywhere near the achievements of your race.
Your people's achievements is Nature's way of showing you promise. And hope.
So hold your heads up high. Only fools ignore you to their own loss and detriment.
xxx
Malaysian Indian Muslims want to be called Malays
Kuala Lumpur, Mar 3 2008: Members of the Malaysian Indian Muslim Youth Movement (Gepima) want to be known as Malays and not Indians.
----
In the 19th century the western countries led by the British forced the Chinese to allow the sale of opium and made a lot of gold/money selling opium derived from India and Afghanistan (the British called that dominion 'the Jewel of the Crown').
At the same time their religious groups offered food and money (subsidised by that opium money, mainly) to any Chinese willing to convert to Christianity.
To the more humane in the west, the view was Christianity would humanise and civilise the Chinese.
Others like a British poet, Rudyard Kipling, considered the Asiatics and Africans (regions the west were fighting to colonise then) 'A Whitemen's Burden'.
And Kipling's poem of that name called upon the Americans to join the British in colonising these regions filled with 'half-devil and half-child'.
That poem was written when the Americans had whacked and taken possession of all Spanish dominions in the Americas and Pacific, and was occupying the Philippines.
Faced with the generosity of money derived the opium sale (so it was really money from the Chinese themselves) and the ineptitude of their own government, many of the poorest and desperate Chinese then took up the conversion offer to survive.
The other Chinese called the conversions 'shi jiao' or literally 'eating religion'.
The Indians of Gepima may also be just wanting to 'eat race'.
But are the people they want to join that generous, or would they just treat them as half-devil and half-child?
xxx
The Man and the Monkeys: A Wall Street Fable
Extracted from the Economist Views
Once upon a time in a village a man appeared and announced to the villagers that he would buy monkeys for $10 each.
The villagers knew that there were many monkeys in their forest. They left their farms on the plains and went into the forest to catch them. The man bought thousands at $10.
As the supply of monkeys started to diminish the villagers stopped looking. Finding and catching monkeys was soon no longer worth the effort for $10. They started to return to their farms to plant the spring crop.
The man then announced that he would buy monkeys for $20 each. This new higher price renewed the effort of the villagers and they headed back into the forest to find and catch monkeys again to sell.
When the monkey supply diminished even further that summer and the people started to return to their farms, worried they had not made enough money selling monkeys to buy all the food they needed but had not planted any crops yet either, the man raised the price he'd pay for monkeys to $25 each. The hunt was on again.
Soon the supply of monkeys became so small that a villager didn't see a monkey in a day of hunting let alone catch one. Even at $25 each the effort was not profitable so the villagers finally headed back to their farms that fall. After nine month's absence from their farms they knew the time had passed to produce enough food for the coming winter, but at least now they had enough money from selling monkeys to buy food to eat.
But the man wasn't finished. He announced that he would buy monkeys for $50 each! The villagers became very excited. He also explained that he had to go to the city on business and that his assistant was to stay behind to buy monkeys on his behalf.
As soon as the man left the assistant told the villagers, "So you think you have made a lot of money selling monkeys, don't you? But do you want to really get rich?"
"Yes, yes!" said the villagers.
The man's assistant went on. "I have a gigantic, enormous cage filled with monkeys. I will sell them to you for only $35 each and when the man returns from the city you can sell them to him for $50 each and make a fat profit. You don't even have to work to find monkeys at all. Then you can not only buy all the food you need for this winter you call all buy flat panel TVs, too."
The villagers were thrilled. They collected all of their savings together and bought all the monkeys in the assistant's cage then awaited the man's return.
They never saw the man nor his assistant again. All the monkeys that were once in the woods were now in the village. All of the villager's savings were gone.
Moral: Substitute housing for monkeys. As the winter of the US economy arrives, you still have the house you had before the price was bid up. Now that prices are falling back down, who has your savings?
Now you know how Wall Street works an asset bubble racket.
(Original by Anonymous, improvements by metalman.)
Once upon a time in a village a man appeared and announced to the villagers that he would buy monkeys for $10 each.
The villagers knew that there were many monkeys in their forest. They left their farms on the plains and went into the forest to catch them. The man bought thousands at $10.
As the supply of monkeys started to diminish the villagers stopped looking. Finding and catching monkeys was soon no longer worth the effort for $10. They started to return to their farms to plant the spring crop.
The man then announced that he would buy monkeys for $20 each. This new higher price renewed the effort of the villagers and they headed back into the forest to find and catch monkeys again to sell.
When the monkey supply diminished even further that summer and the people started to return to their farms, worried they had not made enough money selling monkeys to buy all the food they needed but had not planted any crops yet either, the man raised the price he'd pay for monkeys to $25 each. The hunt was on again.
Soon the supply of monkeys became so small that a villager didn't see a monkey in a day of hunting let alone catch one. Even at $25 each the effort was not profitable so the villagers finally headed back to their farms that fall. After nine month's absence from their farms they knew the time had passed to produce enough food for the coming winter, but at least now they had enough money from selling monkeys to buy food to eat.
But the man wasn't finished. He announced that he would buy monkeys for $50 each! The villagers became very excited. He also explained that he had to go to the city on business and that his assistant was to stay behind to buy monkeys on his behalf.
As soon as the man left the assistant told the villagers, "So you think you have made a lot of money selling monkeys, don't you? But do you want to really get rich?"
"Yes, yes!" said the villagers.
The man's assistant went on. "I have a gigantic, enormous cage filled with monkeys. I will sell them to you for only $35 each and when the man returns from the city you can sell them to him for $50 each and make a fat profit. You don't even have to work to find monkeys at all. Then you can not only buy all the food you need for this winter you call all buy flat panel TVs, too."
The villagers were thrilled. They collected all of their savings together and bought all the monkeys in the assistant's cage then awaited the man's return.
They never saw the man nor his assistant again. All the monkeys that were once in the woods were now in the village. All of the villager's savings were gone.
Moral: Substitute housing for monkeys. As the winter of the US economy arrives, you still have the house you had before the price was bid up. Now that prices are falling back down, who has your savings?
Now you know how Wall Street works an asset bubble racket.
(Original by Anonymous, improvements by metalman.)
Paul Krugman: Partying Like It's 1929
Extracted from artcile in Economist Views
We're relearning the lesson that "unregulated, unsupervised financial markets can all too easily suffer catastrophic failure":
Partying Like It’s 1929, by Paul Krugman, CVommentary, NY Times:
If Ben Bernanke manages to save the financial system from collapse he will — rightly — be praised for his heroic efforts.
But what we should be asking is: How did we get here? Why does the financial system need salvation? Why do mild-mannered economists have to become superheroes?
The answer, at a fundamental level, is that ... having refused to learn from history, we’re repeating it.
Contrary to popular belief, the stock market crash of 1929 wasn’t the defining moment of the Great Depression. What turned an ordinary recession into a civilization-threatening slump was the wave of bank runs that swept across America in 1930 and 1931.
This banking crisis of the 1930s showed that unregulated, unsupervised financial markets can all too easily suffer catastrophic failure. As the decades passed, however, that lesson was forgotten — and now we’re relearning it, the hard way. ...
Banks ... sometimes — often based on nothing more than a rumor —... face runs... And a bank that faces a run by depositors ... may go bust even if the rumor was false.
Worse yet, bank runs can be contagious. If depositors at one bank lose their money, depositors at other banks are likely to get nervous, too, setting off a chain reaction. And there can be wider economic effects...
That, in brief, is what happened in 1930-1931, making the Great Depression the disaster it was. So Congress tried to make sure it would never happen again by creating a system of regulations and guarantees that provided a safety net for the financial system.
And we all lived happily for a while — but not for ever after.
Wall Street chafed at regulations that limited risk, but also limited potential profits. And little by little it wriggled free — partly by persuading politicians to relax the rules, but mainly by creating a “shadow banking system” that ... bypass[ed] regulations designed to ensure that banking was safe.
For example, in the old system, savers had federally insured deposits in tightly regulated savings banks, and banks used that money to make home loans. Over time, however, this was partly replaced by a system in which savers put their money in funds that bought asset-backed commercial paper from special investment vehicles that bought collateralized debt obligations created from securitized mortgages — with nary a regulator in sight.
As the years went by, the shadow banking system took over more and more of the banking business, because the unregulated players ... seemed to offer better deals... Meanwhile, those who worried ... that this brave new world of finance lacked a safety net were dismissed as hopelessly old-fashioned.
In fact, however, we were partying like it was 1929 — and now it’s 1930.
The financial crisis currently under way is basically an updated version of the wave of bank runs that swept the nation three generations ago. People aren’t pulling cash out of banks to put it in their mattresses — but they’re doing the modern equivalent, pulling their money out of the shadow banking system and putting into Treasury bills. And the result, now as then, is a vicious circle of financial contraction.
Mr. Bernanke and his colleagues at the Fed are doing all they can to end that vicious circle. We can only hope that they succeed. Otherwise, the next few years will be very unpleasant — not another Great Depression, hopefully, but surely the worst slump we’ve seen in decades.
Even if Mr. Bernanke pulls it off, however, this is no way to run an economy. It’s time to relearn the lessons of the 1930s, and get the financial system back under control.
We're relearning the lesson that "unregulated, unsupervised financial markets can all too easily suffer catastrophic failure":
Partying Like It’s 1929, by Paul Krugman, CVommentary, NY Times:
If Ben Bernanke manages to save the financial system from collapse he will — rightly — be praised for his heroic efforts.
But what we should be asking is: How did we get here? Why does the financial system need salvation? Why do mild-mannered economists have to become superheroes?
The answer, at a fundamental level, is that ... having refused to learn from history, we’re repeating it.
Contrary to popular belief, the stock market crash of 1929 wasn’t the defining moment of the Great Depression. What turned an ordinary recession into a civilization-threatening slump was the wave of bank runs that swept across America in 1930 and 1931.
This banking crisis of the 1930s showed that unregulated, unsupervised financial markets can all too easily suffer catastrophic failure. As the decades passed, however, that lesson was forgotten — and now we’re relearning it, the hard way. ...
Banks ... sometimes — often based on nothing more than a rumor —... face runs... And a bank that faces a run by depositors ... may go bust even if the rumor was false.
Worse yet, bank runs can be contagious. If depositors at one bank lose their money, depositors at other banks are likely to get nervous, too, setting off a chain reaction. And there can be wider economic effects...
That, in brief, is what happened in 1930-1931, making the Great Depression the disaster it was. So Congress tried to make sure it would never happen again by creating a system of regulations and guarantees that provided a safety net for the financial system.
And we all lived happily for a while — but not for ever after.
Wall Street chafed at regulations that limited risk, but also limited potential profits. And little by little it wriggled free — partly by persuading politicians to relax the rules, but mainly by creating a “shadow banking system” that ... bypass[ed] regulations designed to ensure that banking was safe.
For example, in the old system, savers had federally insured deposits in tightly regulated savings banks, and banks used that money to make home loans. Over time, however, this was partly replaced by a system in which savers put their money in funds that bought asset-backed commercial paper from special investment vehicles that bought collateralized debt obligations created from securitized mortgages — with nary a regulator in sight.
As the years went by, the shadow banking system took over more and more of the banking business, because the unregulated players ... seemed to offer better deals... Meanwhile, those who worried ... that this brave new world of finance lacked a safety net were dismissed as hopelessly old-fashioned.
In fact, however, we were partying like it was 1929 — and now it’s 1930.
The financial crisis currently under way is basically an updated version of the wave of bank runs that swept the nation three generations ago. People aren’t pulling cash out of banks to put it in their mattresses — but they’re doing the modern equivalent, pulling their money out of the shadow banking system and putting into Treasury bills. And the result, now as then, is a vicious circle of financial contraction.
Mr. Bernanke and his colleagues at the Fed are doing all they can to end that vicious circle. We can only hope that they succeed. Otherwise, the next few years will be very unpleasant — not another Great Depression, hopefully, but surely the worst slump we’ve seen in decades.
Even if Mr. Bernanke pulls it off, however, this is no way to run an economy. It’s time to relearn the lessons of the 1930s, and get the financial system back under control.
Financial Markets Panic: Losing Our Marbles
Extracted from an article in Economist Views
Steve Waldman explains how the house of cards can collapse:
Credit Crisis for Kindergarteners, by Steve Waldman:
David Leonhardt notes that it's pretty hard to explain what's going on in the financial world these days... Here's how I'd tell the tale to a child:
Alice, Bob, and Sue have ten marbles between them. Whenever one kid wants another kid to take over a chore, she promises a marble in exchange. Alice doesn't like setting the table, so she promises Bob a marble if he will do it for her. Bob hates mowing the lawn, but Sue will do it for a marble. Sue doesn't like broccoli, but if she ... promises a marble...
One day, the kids get together to brag about all the marbles they soon will have. It turns out that, between them, they are promised 40 marbles! Now that is pretty exciting. They've each promised to give away some marbles too, but they don't think about that, they can keep their promises later, after they've had time to play with what's coming. For now, each is eager to hold all the marbles they've been promised in their own hands, and to show off their collections to friends.
But then Alice, who is smart and foolish all at the same time, points out a curious fact. There are only 10 marbles! Sue says, "That cannot be. I have earned 20 marbles, and I have only promised to give away three! There must be 17 just for me."
But there are still only 10 marbles.
Suddenly, when Bob doesn't want to mow the lawn, no one will do it for him, even if he promises two marbles for the job. No one will eat Sue's broccoli for her, even though everyone knows she is promised the most marbles of anyone, because no one believes she will ever see those 17 marbles she is always going on about. In fact, dinnertime is mayhem... Mom is cross. Dad is cross. Everyone is cross. "But you promised," is heard over and over among the children, amidst lots of stomping and fighting. Until recently, theirs was such a happy home, but now ... no one trusts anyone at all. It's all a bit mysterious to Dad, who points out that nothing has changed, really, so why on Earth is everything falling apart?
Perhaps Mom and Dad will decide that the best thing to do is just buy some more marbles, so that all the children can make good on their promises. But that would mean giving Alice 19 marbles, because she was laziest and made the most promises she couldn't keep, and that hardly seems like a good lesson. Plus, marbles are expensive, and everyone in the family would have to skip lunch for a week to settle Alice's debt. Perhaps the children could get together and decide that an unmet promise should be worth only a quarter of a marble, so that everyone is able to keep their promises after all. But then Sue, the hardest working, would feel really ripped off, as she ends up with a much more modest collection of marbles than she had expected. Perhaps Bob, the strongest, will simply take all the marbles from Alice and Sue, and make it clear than none will be given in return, and that will be that. Or, perhaps Alice and Bob could do Sue's chores for a while in addition to their own, extinguishing one promise per chore. But that's an awful lot of work, what if they just don't want to, who's gonna force them? What if they'd have to be in servitude to Sue for years?
Almost whatever happens, the trading of chores, so crucial to the family's tidy lawns and pleasant dinners, will be curtailed for some time. Perhaps some trading will occur via exchange of actual marbles, but this will not be common, as even kids see the folly of giving rare glass to people known to welch on their promises. It makes more sense to horde.
A credit crisis arises when many more promises are made than can possibly be kept, and disputes emerge about how and to whom promises will be broken. It's less a matter of SIVs than ABCs.
Couldn't the parents force the kids to keep their promises (under threat of a large penalty for default)? Either do what you promised, or incur some punishment that makes doing the chores the only reasonable choice? That seems a lot like the way a court would enforce contracts, so we need one of the kids to declare bankruptcy (or simply refuse to work and accept the punishment of having assets stripped, getting sent to their room, grounded, etc.) to get this going.
Perhaps another way to make this work is to have one of the kids lose their marbles (literally, as in a bad investment) so that some debts cannot be repaid. This would break the chain, create worry and panic, and potentially generate a breakdown in the system. But in this case the role of the government (parents) is easier - if it acts fast enough it could replace the lost marbles using its magical marble making machine (print money), three or four perhaps, to make a loan backed by collateral to keep the system of credits and payments flowing.
As for the child who lost the marbles, the parents could teach him or her a lesson about being responsible by refusing to come to the child's aid, but that just wrecks the entire household - the other kids didn't do anything wrong. Better to loan the child the marbles to keep things flowing, enforce existing contracts, then once the crisis is past, determine how and why the marbles were lost. At that point, if there is reason for the child to bear the consequences of bad choices, then the consequences can be confined to the child rather than spread throughout the household. In addition, the parents could also consider instituting new rules (a regulatory response to the crisis), e.g. automatic penalties for non-performance of a contract (e.g. capital requirements, forfeiting a bike or some other toy to the other party, etc.) so that once a deal is agreed upon, the kids are less likely to renege, rules about how marbles can be stored so they aren't lost accidentally, and so on
Steve Waldman explains how the house of cards can collapse:
Credit Crisis for Kindergarteners, by Steve Waldman:
David Leonhardt notes that it's pretty hard to explain what's going on in the financial world these days... Here's how I'd tell the tale to a child:
Alice, Bob, and Sue have ten marbles between them. Whenever one kid wants another kid to take over a chore, she promises a marble in exchange. Alice doesn't like setting the table, so she promises Bob a marble if he will do it for her. Bob hates mowing the lawn, but Sue will do it for a marble. Sue doesn't like broccoli, but if she ... promises a marble...
One day, the kids get together to brag about all the marbles they soon will have. It turns out that, between them, they are promised 40 marbles! Now that is pretty exciting. They've each promised to give away some marbles too, but they don't think about that, they can keep their promises later, after they've had time to play with what's coming. For now, each is eager to hold all the marbles they've been promised in their own hands, and to show off their collections to friends.
But then Alice, who is smart and foolish all at the same time, points out a curious fact. There are only 10 marbles! Sue says, "That cannot be. I have earned 20 marbles, and I have only promised to give away three! There must be 17 just for me."
But there are still only 10 marbles.
Suddenly, when Bob doesn't want to mow the lawn, no one will do it for him, even if he promises two marbles for the job. No one will eat Sue's broccoli for her, even though everyone knows she is promised the most marbles of anyone, because no one believes she will ever see those 17 marbles she is always going on about. In fact, dinnertime is mayhem... Mom is cross. Dad is cross. Everyone is cross. "But you promised," is heard over and over among the children, amidst lots of stomping and fighting. Until recently, theirs was such a happy home, but now ... no one trusts anyone at all. It's all a bit mysterious to Dad, who points out that nothing has changed, really, so why on Earth is everything falling apart?
Perhaps Mom and Dad will decide that the best thing to do is just buy some more marbles, so that all the children can make good on their promises. But that would mean giving Alice 19 marbles, because she was laziest and made the most promises she couldn't keep, and that hardly seems like a good lesson. Plus, marbles are expensive, and everyone in the family would have to skip lunch for a week to settle Alice's debt. Perhaps the children could get together and decide that an unmet promise should be worth only a quarter of a marble, so that everyone is able to keep their promises after all. But then Sue, the hardest working, would feel really ripped off, as she ends up with a much more modest collection of marbles than she had expected. Perhaps Bob, the strongest, will simply take all the marbles from Alice and Sue, and make it clear than none will be given in return, and that will be that. Or, perhaps Alice and Bob could do Sue's chores for a while in addition to their own, extinguishing one promise per chore. But that's an awful lot of work, what if they just don't want to, who's gonna force them? What if they'd have to be in servitude to Sue for years?
Almost whatever happens, the trading of chores, so crucial to the family's tidy lawns and pleasant dinners, will be curtailed for some time. Perhaps some trading will occur via exchange of actual marbles, but this will not be common, as even kids see the folly of giving rare glass to people known to welch on their promises. It makes more sense to horde.
A credit crisis arises when many more promises are made than can possibly be kept, and disputes emerge about how and to whom promises will be broken. It's less a matter of SIVs than ABCs.
Couldn't the parents force the kids to keep their promises (under threat of a large penalty for default)? Either do what you promised, or incur some punishment that makes doing the chores the only reasonable choice? That seems a lot like the way a court would enforce contracts, so we need one of the kids to declare bankruptcy (or simply refuse to work and accept the punishment of having assets stripped, getting sent to their room, grounded, etc.) to get this going.
Perhaps another way to make this work is to have one of the kids lose their marbles (literally, as in a bad investment) so that some debts cannot be repaid. This would break the chain, create worry and panic, and potentially generate a breakdown in the system. But in this case the role of the government (parents) is easier - if it acts fast enough it could replace the lost marbles using its magical marble making machine (print money), three or four perhaps, to make a loan backed by collateral to keep the system of credits and payments flowing.
As for the child who lost the marbles, the parents could teach him or her a lesson about being responsible by refusing to come to the child's aid, but that just wrecks the entire household - the other kids didn't do anything wrong. Better to loan the child the marbles to keep things flowing, enforce existing contracts, then once the crisis is past, determine how and why the marbles were lost. At that point, if there is reason for the child to bear the consequences of bad choices, then the consequences can be confined to the child rather than spread throughout the household. In addition, the parents could also consider instituting new rules (a regulatory response to the crisis), e.g. automatic penalties for non-performance of a contract (e.g. capital requirements, forfeiting a bike or some other toy to the other party, etc.) so that once a deal is agreed upon, the kids are less likely to renege, rules about how marbles can be stored so they aren't lost accidentally, and so on
Predicting Recessions
An article on a model to determine probability of turning in business cycles in the US using the Markov-Switching model.
http://www.uoregon.edu/~jpiger/cp_realtime_2_020907.pdf
xxx
http://www.uoregon.edu/~jpiger/cp_realtime_2_020907.pdf
xxx
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