Are we only seeing the tip of the iceburg of the financial crisis? Here’s an economics lecture at Princeton University that’s really quite helpful in explaining the background behind the financial crisis to a layperson. At 43:00, Paul Krugman explains that the current crisis goes deeper than taking toxic debt off the balance sheets of banks. The $700 billion bailout is priced on the assumption that housing prices will be relatively stable, but in fact the problem is more dire. He says:

Real housing prices … This is a huge bubble, so huge problem. We are not by any reasonable index close to back where we started. The housing decline not still over, substantial decline still to come. For what it’s worth, this isn’t over. There are future markets, people betting on housing prices, they are showing another 17 percent or so … there’s a lot of housing decline still to come… that means there are a lot of losses … losses we can’t make go away.

Considering the financial crisis from an All Quadrants perspective, it’s been interesting to observe that the initial responses of John McCain and Barack Obama seemed to fall along predictable ideological fault lines. Obama, stressing the lower-right quadrant, blamed the causes of the crisis on bad economic structures (deregulation of the financial markets); accordingly, he was sympathetic to systemic remedies (e.g., bailing out Fannie Mae and Freddie Mac, acquiring 80 percent equity in AIG, etc.)

In contrast, McCain stressed the centrality of upper-left “greed and corruption” on Wall Street; accordingly, he seemed to flounder (e.g., sending mixed signals regarding government bailout proposals). Even on the Monday morning when the crisis reached a crescendo (the failure of Lehman Brothers, Merrill Lynch selling itself to Bank of America, etc.), he made his infamous statement affirming the strength of the economy’s fundamentals. Even in the face of enormously complex socio-economic upheaveal so grave that it led a Republican Secretary of the Treasury to call for an overhaul of the structures of ownership of our economic structures (essentially replacing our current system with a quasi-socialistic structure), McCain was worried about soothing the worried American psyche by attempting reflexively to calm frightened citizens.

So I would say that the complaint that McCain is “out of touch” is justified, in part, by the fact that McCain’s ideological commitment to the centrality of individuals in causing social ills somewhat blinds him to the need for social-structural causes and remedies. Since he thinks of the problem as greed and corruption, he sees solutions in terms of firing the bad individuals who he blames for the crisis (as when he said he would fire the chairman of the Securities and Exchange Commission) and replacing them with good individuals who will act with virtue (as when he focused his attention on installing Andrew Cuomo at the SEC or when he wanted a bailout oversight committee featuring Mitt Romney and Michael Bloomberg).

The bipartisan leadership in Congress seems to have a better grasp on the need for a structural remedy (and McCain himself eventually made it clear that he favors such an approach), even if they disagree with the structures responsible for the crisis (most Democrats blaming GOP-led deregulation, most Republicans struggling to offer alternative narratives, and Bill Clinton alone among the most prominent commentators seeming to reach for explanations that place portions of blame on both parties). However, Congress failed to win passage of the $700 billion bailout bill because they underestimated the measure’s enormous unpopularity with the American voter. A narrow majority of legislators were unwilling to support a bill so politically poisonous as to doom their reelection chances.

Had the Congressional leadership been less obsessed with lower-right quadrant concerns (writing a bill) more sensitive to the importance of lower-left quadrant concerns (explaining to the voters why such a bill was really in their best interests), then the bailout might not have failed. If they succeed in passing a bill later this week it will probably owe to their stress on reframing the bill as a ”economic rescue” rather than a “Wall Street bailout”. 

Speaking as a citizen only and not an economics expert (and aren’t 99 percent of us?) I find myself feeling confident our government can come up with a workable solution if given enough time. I suspect that a short-term fix may be preferable to a huge, irreversible expenditure. Trapper John at DailyKos seems to be thinking along the same lines:

Now I’m not an economist, so my opinion is just the opinion of a reasonably well-educated layperson. That puts me right in line with most Kossacks, most trad med talking heads, and most Members of Congress. But it seems to me that a lot of the objections to the bill which was defeated yesterday stemmed from its sheer magnitude. The idea that American taxpayers would be giving $700 billion — $2300 for every man, woman, and child in the United States — to the big brains that got us into this mess . . . well, that just wasn’t going to fly. But given that we’ve been talking about $700 billion for two weeks, if you now take that number and drastically cut it, it seems a lot more palatable.

And cutting the number is certainly doable. Paulson is on record as saying that, in order to have the freedom that it needs to accomplish the task, Treasury must be able to spend $50 billion per month to purchase toxic securities. If Congress were to pass a $200 billion bill that explicitly is intended to be a first chapter in a rescue package — carrying Treasury’s activities through till the end of January — we would still be furnishing Paulson with the $50B/month that he’s said that he needs in order to act in an effective manner. To the extent that the financial sector wants to see a real commitment to the crisis, we’d be providing it. But we’d also be acting in recognition of the giant elephant in the corner of the room: the fact that we are very likely to have a Democratic President and an even more Democratic Congress in less than four months time. Everyone involved in this saga, from the politicians to the bankers to the shareholders to regular Americans, knows that an Obama Administration would handle this problem very differently than Bush and Co.

In conclusion, I’m hopeful that our leaders can do the minimum necessary now to avert a crisis over the next four months. And then the new leadership in Washington can take up the problem in January after more careful consideration. Maybe then we could ensure that we’re not just putting out a short-term fire in the credit markets, but addressing the long-term stability of our country’s financial institutions in light of the collapse of an enormous bubble in housing prices. On the other hand, maybe we don’t have the luxury of four months, and we shouldn’t take the risk of another Great Depression. But it’s hard for us laypersons to know either way.

Technorati Tags: economics, financial crisis, politics, quadrants

In the Wall Street Journal op-ed “Look Who’s Irrational Now” , Mollie Ziegler Hemingway mocks atheists for their irrationalism. But by ignoring the pre/trans fallacy, Ziegler Hemingway creates more confusion than clarity.

Mollie scores easy points against the comedian Bill Maher who entertains his audience by taking easy potshots at those silly religionists. If her claims that Maher has wacky, anti-scientific views on medicine are correct (is it really true that Maher believes aspirin is lethal?), then she has succeeded in proving that you can’t look to a comedian to provide serious, sober commentary on medical topics.

However, the more interesting criticism of Mahr isn’t that his own views of the world are flaky (which they certainly may be), but that his views of religion are stupidly intolerant and misinformed. Maher’s statement that “religion must die for man to live” is not reprehensible because it is not scientifically provable, it’s unfortunate because it fails to strike an appropriately nuanced attitude towards religion. Maher sees religion in stark black-and-white terms, failing to appreciate its complexity, its capacity for both good and evil, helpfulness and harm, ennoblement and debasement.

If Ziegler Hemingway’s musings on GetReligion are any guide to her sensibilities (she’s a very conservative thinker), then it’s easy to see why her op-ed fumbles. She probably doesn’t criticize Maher for lacking in tolerance or nuance of thought because because her own religious worldview is essentially myth-based. She is correct in her assumption that religious people are no more ignorant or superstitious or irrational than atheists, but she doesn’t recognize that the basis of her own worldview represents only one style of rationality.

Here’s a university survey Mollie tells us about:

The Gallup Organization, under contract to Baylor’s Institute for Studies of Religion, asked American adults a series of questions to gauge credulity. Do dreams foretell the future? Did ancient advanced civilizations such as Atlantis exist? Can places be haunted? Is it possible to communicate with the dead? Will creatures like Bigfoot and the Loch Ness Monster someday be discovered by science?

The answers were added up to create an index of belief in occult and the paranormal. While 31% of people who never worship expressed strong belief in these things, only 8% of people who attend a house of worship more than once a week did.

Mollie likens this research to a previous study which concluded that “irreligious college students to be by far the most likely to embrace paranormal beliefs, while born-again Christian college students were the least likely”. Her inference? Get this: atheists, secularists, humanists and rationalists are more susceptible to superstition than the religious.

Such confusion is only possible when one ignores the mountains of research in psychological development indicating that generally cognitive development proceeds progressively through successive stages from prerational to formal rationality to postformal stages. Thus, there are prerational worldviews, rational views, and postrational.

Magical thinking (say, credulous belief in Bigfoot) is common at the first level because cognition is generally precritical, but these beliefs tend to diminish when they are supplanted by an overarching myth-based worldview (such as fundamentalist Christianity). Eventually the myths are supplanted by more rationalistic forms of religion (e.g., deism) and skepticism (e.g., atheism). Of course, development can stop at any stage in the process, and that’s not necessarily pathological but may be an altogether natural and fine thing.

Thus, Gallup’s survey isn’t really telling us that scientifically-minded people are stupider or more credulous than the religious. It’s telling us that when people become very religious they tend to replace magical thinking with mythic thinking. And it confirms that the majority of people in our society have overcome most forms of magical thinking, even though (as other surveys have repeatedly told us) large swaths of people have not yet overcome mythical thinking. And that’s about it.

What do the colors mean? (see sidebar).

Technorati Tags: atheism, GetReligion, integral, mythic, religion

A reader inquires:

I am looking for a 2nd Tier sponsor to work the 12 steps with and I wanted to ask if you would do that with me.

My response:

I’m not sure how to respond to your inquiry because I consider myself informed by the 12-step tradition but don’t actually follow that particular plan. My own recovery model is generally Integral, meaning that it is grounded in body (a commitment to developing my personal health and well-being and remaining abstinent regarding my “problem drugs”), mind (including a commitment to my personal mission statement and continual reflection on how best to live according to its light), shadow work (including ongoing men’s processes in community), and a daily spiritual practice (Whole Writing).

I do not abstain from alcohol consumption; however, on my doctor’s advice I do limit myself to moderate use. From a 12-step perspective, this choice is generally frowned upon.

In light of this information, please let me know if you would like to communicate further regarding your search for a sponsor.

Live clean, healthy, and walk in the ground of Spirit…

Joe

Technorati Tags: 12 step, integral, recovery