Diary of a Very Bad Year
June 28, 2010 12:37 AM Subscribe
Keith Gessen of n+1 Magazine interviewed an anonymous hedge fund manager. [Previously]. HFM provided many more insights than were published back in 2008.
"The conversations continued through the crisis and after, following the trajectory of one financier facing the hardest days he’d yet seen. [Last] week Harper Perennial [published] Diary of a Very Bad Year, the book that resulted from those conversations."This past week n+1 published several excerpts and outtakes.
- "Who Spent The Money?"
- "Who Made Madoff?"
- "A Bubble in People"
- "African Outtake"
- "Bullies and Bankers"
Allow me to pull my foot out of my mouth, since the quotation above is from a transcript of a conversation as far as I can tell.
posted by bardic at 2:16 AM on June 28, 2010
posted by bardic at 2:16 AM on June 28, 2010
"By the same token, we have, you know, ten thousand years of human history where people are always wanting more, making more, and getting more. What’s the probability that it just so happens that you and I have been born into the generation where we finally run out of wants? I just think it’s impossible"
We've essentially followed an exponential curve in terms of development.
If the Eiffel tower represented the timeline of planet earth, Homo Sapiens' history would be the layer of paint on the apex (or something similarly insignificantizing).
Industrialization is a similarly short lived phenomenon in the history of Homo Sapiens.
It's incredibly myopic and naive to think that we'll never encounter a situation where we'll no longer be "making more, and getting more".
posted by vectr at 7:20 AM on June 28, 2010
Oh, and if we're talking about probability, consider these two scenarios: Earth blows up tomorrow vs. Humanity continues to exist for many more generations and billions and billions more people are born.
Given that you exist, the probability that you you're born in the former scenario is higher than the latter.
posted by vectr at 7:34 AM on June 28, 2010
Given that you exist, the probability that you you're born in the former scenario is higher than the latter.
posted by vectr at 7:34 AM on June 28, 2010
I haven't read the whole thing yet, but...
posted by codacorolla at 8:01 AM on June 28, 2010 [1 favorite]
But we’ve had property for ten thousand years. We’ve had monetary exchange for ten thousand years. We haven’t had advanced capitalism, but people have always striven to get more and in general the trend has been for a higher level of consumption. There’ve been periods of setback, but the long trend is very clear. I think it’s very unlikely that we’ve suddenly hit our limit, that we can’t come up with more needs, and therefore we’re at crisis because we can’t grow anymore. Ultimately the thing where we might be heading into a change that is challenging to our economies is if, in the advanced economies, we see the end of population growth. And we are seeing some countries where there has been a very important pivot, countries going into long and sustained population shrinkage for reasons not related to war, reasons related to reproductive choices. And it’s not clear whether, I take your point that it’s not clear whether our brand of capitalism, call it our political economy, capitalism plus the welfare state, can be easily sustained in this era of shrinking population. But that’s a much bigger question, and I think it’s different from the one you asked.Maybe, at a certain point, it becomes clear that we can't continue with the "more needs = more better" idea. We've had superstition and bigotry for the entirety of human history, but at a certain point, with the knowledge we've gain from species-wide experience, we've begun to eliminate them in favor of something that doesn't kill us. When the more need is more bread for your family, there's nothing particuarly wrong with that. When the more need is a new car, new computer, and tons of new plastic shit every year, then that starts reaching the point where it effects us all. Capitalism did its thing, no doubt, and I'm probably better for it, but at a certain point it becomes clear that it's not the end-all-be-all of human social organization.
posted by codacorolla at 8:01 AM on June 28, 2010 [1 favorite]
codacorolla: I don't think you even need to go that far to find the flaw in the logic. Somehow he thinks that "more needs" leads to growth, and that an end-of-growth crisis could (only?) come from an inability to "come up with more needs."
It's like saying that you only die of dehydration by mysteriously not being thirsty anymore. Although I suppose it's possible, the more likely explanation is running out of water.
Similarly, we might hit a growth wall — I think it's quite inevitable — not because we suddenly decide that we're all fine and we don't have any more needs, but because we run into some problem (resource availability, pollution, political destabilization / war) that we cannot solve in a way that lets the growth train keep on chuggin'.
My personal feeling is that strongly pro-growth people — people whose living or lifestyle depends on constant growth (which is most of us in the West) — have some understanding of this on a reptile-brain level, but ignore it because they realize they can't change it while still having continued exponential growth. Instead they cross their fingers while lashing out at any voluntary measures to curtail growth, since once you've decided to ignore the possibility of disaster you might as well go for broke. You can see this same attitude crop up in various places — the pre-Crunch financial industry, energy policy, war. When presented with two very undesirable alternatives, a lot of people simply refuse to choose — even if in not choosing, they make a default selection that's the worse of the two.
In the U.S. there is quite a bit of American exceptionalism at work, but I think the bigger problem is actually Western Civilization Exceptionalism. Since our civilization has avoided crushing disaster for so long, it's easy to fall into the trap of thinking that we're somehow special and immune, and that we'll (usually via Science!) always figure something out no matter how bad it gets.
posted by Kadin2048 at 8:40 AM on June 28, 2010 [1 favorite]
It's like saying that you only die of dehydration by mysteriously not being thirsty anymore. Although I suppose it's possible, the more likely explanation is running out of water.
Similarly, we might hit a growth wall — I think it's quite inevitable — not because we suddenly decide that we're all fine and we don't have any more needs, but because we run into some problem (resource availability, pollution, political destabilization / war) that we cannot solve in a way that lets the growth train keep on chuggin'.
My personal feeling is that strongly pro-growth people — people whose living or lifestyle depends on constant growth (which is most of us in the West) — have some understanding of this on a reptile-brain level, but ignore it because they realize they can't change it while still having continued exponential growth. Instead they cross their fingers while lashing out at any voluntary measures to curtail growth, since once you've decided to ignore the possibility of disaster you might as well go for broke. You can see this same attitude crop up in various places — the pre-Crunch financial industry, energy policy, war. When presented with two very undesirable alternatives, a lot of people simply refuse to choose — even if in not choosing, they make a default selection that's the worse of the two.
In the U.S. there is quite a bit of American exceptionalism at work, but I think the bigger problem is actually Western Civilization Exceptionalism. Since our civilization has avoided crushing disaster for so long, it's easy to fall into the trap of thinking that we're somehow special and immune, and that we'll (usually via Science!) always figure something out no matter how bad it gets.
posted by Kadin2048 at 8:40 AM on June 28, 2010 [1 favorite]
Given that you exist, the probability that you you're born in the former scenario is higher than the latter.
Past performance is no guarantee of future results.
posted by zippy at 10:04 AM on June 28, 2010
Past performance is no guarantee of future results.
posted by zippy at 10:04 AM on June 28, 2010
From the Who Spent the Money? link: I mean let’s just say that we have a class of people who were very highly paid to be witch doctors, and then tomorrow Western medicine comes to the economy, and everybody realizes that witch doctors . . . it’s much better to take pills than go to the witch doctors. Well these witch doctors had some very specific knowledge that was worth a lot but now is worth nothing. But there’s some use for them, right? They can become manual laborers. That’s a very difficult transition. They’re not just going to accept that right off the bat, that witch doctor skills are worthless and the price of their labor has gone from very high to practically nothing.
And the hedge-fund manager is not speaking ironically.
posted by Mental Wimp at 1:07 PM on June 28, 2010
And the hedge-fund manager is not speaking ironically.
posted by Mental Wimp at 1:07 PM on June 28, 2010
That Harper's article reminded me of something else I recently read on n+1, "On Your Marx: Neoliberalism on the rocks."
The motor of accumulation has been sputtering for nearly four decades, and its coughs can be heard again now that the roar of combusting paper wealth is dying down. This doesn’t mean capitalism or even growth is at an end. Economists of all kinds have pinned their hopes on the transformation of laboring and saving Chinese into hardy consumers. In any case, the US consumer—a ravening appetite in a paper house—appears to be finished as the world’s buyer of last resort. It would add a nice dialectical twist to the future history of our period if it could be said that, around the time the post-Maoist Chinese took up shopping, the post-bubble Americans turned to studying Marx.posted by ob1quixote at 1:09 PM on June 28, 2010
Past performance is no guarantee of future results.
Because of the phenomenon known as regression to the mean, chasing high performing stocks or whatever is almost a guarantee that they will be outperformed in the future.
posted by Mental Wimp at 3:19 PM on June 28, 2010
Because of the phenomenon known as regression to the mean, chasing high performing stocks or whatever is almost a guarantee that they will be outperformed in the future.
posted by Mental Wimp at 3:19 PM on June 28, 2010
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"So some people thought that that’s what Bernie Madoff was really doing, that’s how he generated these returns, it was by front-running."
That's just plain ugly writing. But the content is definitely interesting.
posted by bardic at 2:15 AM on June 28, 2010