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One Dam Metaphor For The 2012 Global Financial System

  
Analysis, Education
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One Dam Metaphor for the 2012 Global Financial System

What do you do when flood waters threaten the dam? If you’re the Federal Reserve, you close the floodgates and let the water rise.

Metaphors have an uncanny ability to capture the essence of complex situations. Here is one dam metaphor that distills and explains the entire global financial system in 2012. The way to visualize the current situation is to imagine a dam holding back rising storm waters.

The dam is the regulatory system, the rule of law, trust in the transparency and fairness of the system and the machinery of perception management. All of these work to keep risk, fraud and excesses of speculation and leverage from unleashing a destructive wave of financial instability on the real economy below.

As legitimate regulation and transparency have been replaced with simulacra and manipulated data, the dam’s internal strength has been seriously weakened.

Depending on how you date various rivers of financialization, water has been piling up behind the dam since either 1982, 1992 or 2000. In this metaphor, the water is comprised of multiple sources of destabilization: rising money supply, debt, speculation, leverage, fraud, shadow banking and lax regulation.

Common sense suggests that water rising to dangerous levels would trigger an official response of opening the floodgates to relieve the pressure. Unfortunately for the real economy, common sense has nothing to do with the official response of central governments and banks. Their entire raison d’etre (reason to be) is self-preservation and the preservation of the financial Elites that set the context and policy of the State and central bank.

In effect, the State and central bank recognize that it is highly dangerous to let any water out, lest the toxic waste of fraud, speculative incentives, excessive leverage, etc. corrode the spillway and cause the entire dam to give way.

The official rationalization for keeping the gates closed even as the water is rising to the very lip of the dam is that the flood water released might harm the real economy downstream. (more…)

On Man’s Search for Meaning

  
  Education
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This book serves as an introduction to Dr. Frank’s theory of logotherapy through his experience of three years within the Nazi concentration camps. This existential analysis theory is based on finding meaning to one’s existence and seizing responsibility for it. A gripping story and a very educative and enlightening read within the psychology genre.

Below are key excerpts from the book that I found particularly insightful:

1- “The prisoner passed from the first to the second phase: the phase of relative apathy, in which he achieved a kind of emotional death.”

2- “At such a moment it is not the physical pain which hurts the most (and this applies to adults as much as to punished children); it is the mental agony caused by the injustice, the unreasonableness of it all.”

3- “Apathy, the main symptom of the second phase, was a necessary mechanism of self-defense. Reality dimmed, and all efforts and all emotions were centered on one task: preserving one’s own life and that of the other fellow.”

4- “Then I grasped the meaning of the greatest secret that human poetry and human thought and belief have to impart: The salvation of man is through love an in love.”

5- “This intensification of inner life helped the prisoner find a refuge from the emptiness, desolation and spiritual poverty of his existence, by letting him escape into the past.” (more…)

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