samuel x. brase likes to write

Response: The Value of the Recession

Posted in current affairs, novel planning by Sam X. on 26 May 2010

In regards:

  • The Big Short, Michael Lewis
  • “Faulty Basel,” by Marc Levinson. Foreign Affairs, May/June 2010.
  • “Nouriel Roubini said the bubble would burst and it did. So what next?” by Jonathon Sibun., May 23, 2010.

In the US there is a lack of bipartisanship between Democrats and Republicans, in Germany Merkel has just lost the majority in her legislature, in Japan you have a weak and ineffective government, in Greece you have riots and strikes. The point is that a lot of sacrifices will have to be made in these countries but many of the governments are weak or divided. It is that political strain that markets are worried about. The view is: you can announce anything, we’ll see whether you’re going to implement it.” -Nouriel Roubini

I listened to The Big Short on audiobook the last couple of weeks, which coincided nicely with a couple of articles in the latest Foreign Affairs and the quoted interview with Nouriel Roubini, above.

I cannot speak intelligently about the subprime mortgage crisis of 2008; nor can I speak intelligently about the conditions we now live in. I know unemployment is high, I know a lot of people are broke. I was unemployed for 11 out of 12 months in 2009, but I received unemployment virtually the whole time and thus my experience was mitigated.

Since I cannot speak intelligently, I rely on reading books and articles from intelligent people (and the occasional conversation with my father). One of my desires, for my epic sci-fi series that I’m not yet ready to write, is to demonstrate economic influences within a futuristic society. It is clear to me that money is very important when it comes to shaping the world, however, most major sci-fi stories shirk its importance.

Star Wars tried to break ground in this regard with all the trade embargo talk at the beginning of The Phantom Menace, but it was far from compelling. Dune did it more successfully, as the driving force behind the story, the spice melange, was an extremely valuable commodity and sparked much of the decisions made by offworlders (it had very little impact on the Fremen, of course, but they responded to occupation, which resulted because of the spice). Much of Philip Dick’s books circumvent economics, Foundation addresses it as a inferior factor when compared to military might, and in most dystopian stories, concerns of freedom trump money, as in We, The Matrix, and Dark City.

Of course, my sci-fi knowledge is not exhaustive and I’m sure some stories do it well. I’m told George R.R. Martin incorporates it fairly successfully, and the first book in his series is on my “to read” list. But suffice it to say, economics generally takes a backseat in space epics.

Thus, my book and article reading is, in a sense, research. I am trying to understand how macroeconomic forces can shape the world, and how the world in turn shapes those forces.

Still, when I pull back, it strikes me as a great drama, one with a prelude from 2004 to 2008, the first act in 2008 to the end of 2009, and the second act beginning in 2010. Roubini, in his interview, points to many countries that are in trouble, and it is essentially the entire “First World,” from the eurozone to Japan, the UK, and the US. None of these countries are safe, only some (Germany?) are in less precarious positions.

And rising in the east is China. They have their own problems, economic and otherwise, one being shrinking freshwater supplies, and another being, obviously, it’s massive population which carries with it substantial demands of resources. How will this great economic drama affect their growth? Will they benefit, or will curtailed trade with Western countries damage their own economy?

Michael Lewis has a bleak outlook about our recent economic past, and Nouriel Roubini has a bleak outlook for our economic future. Our past is ridiculous; as Lewis points out in his book, incentives to even begin to do the right thing on Wall Street on nonexistent. That is was the bailout said. You get a bonus when things are booming, you get a bonus when you fail and your company is propped up by taxpayer money.

Our future sounds potentially terrifying. Reform is already being attacked by the Republicans. And Levinson points to a need to de-globalize, in order to lessen the future possibility of a domino crisis. Roubini points to numerous weak governments the world over that may be unable to enforce the changes that our situation demands. The problem, Roubini explains succinctly, is that from 2004-2008, a whole ton of debt was created, which was privately owned by banks and other institutions. When the debt went bad, these institutions couldn’t pay anyone or anything: From the electric bill to paychecks. So governments gave them money for the debts. And now the governments, Greece, Spain, and others, are defaulting on that debt.

Who bails out the government?

The plot is thickening. As a writer and a reader, I’m extremely excited. As a human being on this planet, I’m rather quite scared. Money doesn’t buy happiness, but it does buy security. What happens when we can’t buy our security anymore?



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