[OPE] Rothkopf and Paulson on risk

David Rothkopf, ("9/11 Was Big. This Is Bigger", Sunday, October 5, 2008; Page B01) writes:

According to polls of big institutional investors by the National Strategic Investment Dialogue, more than 80 percent do not feel their boards even understand the risks inherent in their portfolios -- as they are required to do by law -- primarily because of the complexity of these instruments and the new global financial system they dominate. (...)
http://www.washingtonpost.com/wp-dyn/content/article/2008/10/03/AR2008100301969.html
 http://www.nationalstrategicinvestmentdialogue.com/2008/2008Events.htm

Mr Henry Paulson on the road to Samara confesses:

We have not in our lifetime dealt with a financial crisis of this severity and unpredictability. (...) We needed the financial rescue package so we could intervene, stabilize our financial system, and minimize further damage to our economy. The rescue package was not intended to be an economic stimulus or an economic recovery package; it was intended to shore up the foundation of our economy by stabilizing the financial system, and it is unrealistic to expect it to reverse the damage that had already been inflicted by the severity of the crisis. http://www.house.gov/apps/list/hearing/financialsvcs_dem/paulson111808.pdf

In reality, the spectre of unemployment is the conduit of more labour market flexibilisation. More security and less risk for the bourgeoisie and its acolytes, less security and more risk for the workers, that's the slogan. "Life's an adventure, but just don't get too adventurous with me, baby, I'm not in your league or class."

Just where this all leads to, is clarified by Der Spiegel:

One feature of stability in the German Federal Republic after World War II was always the nation's broad middle class. After the "economic miracle" of the 1960s, West Germans as a whole were neither too rich nor too poor nor too dissatisfied with their new democracy. Those sentiments are changing, according to the annual "Datenreport 2008" released Wednesday by the Social Science Research Center. Real income between 2001 and 2006 has stagnated, rising from 1,392 euro per household per month only to 1,413 euro. And by 2006 the poorest 20 percent of the population received 9.3 percent of the total monthly income among German private citizens -- down from 10.1 percent in 1997. Meanwhile the share of the richest 20 percent has increased by one-fifth over the same period. The numbers confirm a trend toward a smaller middle class recognized by other institutes, including the Organization for Economic Cooperation and Development and the German Institute for Economic Research. "While the portions of the population at the top and bottom of the income scale have increased over the past few years," reads the "Datenreport 2008," the corresponding portions of the middle class have shrunk." http://www.spiegel.de/international/germany/0,1518,591615,00.html

What is the result of that? Well, as I have noted in the past, the general social scientific law that applies is, that the less egalitarian a society is, the more crime occurs, and crime incidence is the most basic indicator we have of public morality. I can vouch for that from personal experience as well, since plenty stuff got stolen in the past.

As Lenin commented, "Life is hellishly difficult", but then he should have listened more to Maxim Gorky.

Jurriaan

A man
Extremely lazy
Exhumes the cooked pigeon
His words indignant
Because it was cooked wrong
Middle class revolt

- The Fall, "Middle Class Revolt"

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Received on Thu Nov 20 13:44:21 2008