THE ROGUE WAVE IS TOO BIG, SO CHANGE THE OCEAN!

CONVENTION OF THE COMMONS CANNOT ADDRESS CATASTROPHE OF THE AGES: O BA MA NEEDS TO O BA BOOM IN MATTERS ECONOMIC.

In another excellent editorial [NYT, January 22, 2008], professor Krugman points out that: "Everyone hoped that President Obama’s Inaugural Address would offer some reassurance. But at least on matters economic, the speech was too conventional."

Camping outside of the Obama administration, as Krugman does, has the obvious advantage of being able to choose a mountain top, with fresh and clear air, and to look down in the smoggy valleys where pathetic minds choke on power...

Yes, there was too much, in the economic part of Obama's speech, of it's all-our-fault-we-puritans-did-not-beat-our-backs-enough-with-chains. Instead, of course, what happened is that the plutocratic wolves have guarded the sheep, all too long, and now that they have run out of sheep, they howl to get more, and more sheep bleat, and come their way.

The only way out is something like the Resolution Trust Corporation, a total nationalization of the financial sector. One cannot just nationalize a piece, for competitive reasons. (Yes, in the Scandinavian financial crisis at least one giant private bank opted out of nationalization and survived, but this, now, is different.)

Nationalizing all of finance as it is, of course will not be enough. It would be a momentary measure, but the system needs to be changed long term. New laws will have to prevent the malignant growth of derivatives, way too risky investing motivated by excessive personal greed of financial manipulators, excessive trading and bonuses. A whole arsenal of new tools could allow to do this [detailed rules on derivatives, that should be restricted to those officially authorized, worldwide; transaction tax; higher taxes on short term cap gains, lower on long term ones].

The future financial sector should be of assistance, have a fiduciary duty of keeping capital in trust, and have some leeway to invest according to tight regulations. The idea being that never again should the financial tail wag the economic dog. At the limit [see comrade Stalin], a powerful economy can operate without finance; but what we have here now is a situation where a rogue financial system is strangling the real economy. Rogue waves exist in the ocean, on a regular basis: they can be 100 feet tall, when other waves are only 15 feet tall [they sink hundreds of ships a year]. What we have here is a rogue wave so bad, we will have to change the ocean.

Last point about brain power: most of Obama's power will be into making speeches with great ideas, and he has to learn to trust the force of his intelligence. The professional speech writers of the American presidency constitute an unfortunate canning of the mind. Professional speech writers are like lobbyists for the common mind, rewarded with money to think common thoughts. Nothing that a soaring imagination can blossom from.

Patrice Ayme

Patriceayme.wordpress.com