In search of the body beautiful

June 26, 2010

Every day on our TV screens, in magazines and on billboards we are bombarded with unrealistic images of beautiful bodies that do not resemble any real human being. We might think that this is at the behest of evil advertising executives but there is nothing new under the sun. Just look at the Venus of Willendorf, which was carved some 25,000 years ago or the sculptures of Polyclitus and you will see how they exaggerated the parts that were most important to them.

The idea of beauty though is problematic. We live in an epoch that questions its validity. It is seen as something which is inconsequential or even morally suspect.  We are uncomfortable with  what seems like an obsessive quest for beauty; that people are prepared have their skin burnt, foreign materials implanted in their bodies and fat sucked out of them must surely be a symbol of a sick society.

In her recent book Bodies the psychotherapist Suzie Orbach claims that there is no such thing as a body outside culture but I cannot agree with her. We are animals and sensitivity to beauty is part of our nature. Ruskin was wrong; the peacock’s tail is anything but superfluous. This is how genes perpetuate themselves. And humans are not immune to this kind of attraction. The people who noticed the indicators of genetic fitness enjoyed more reproductive success and we are their descendents. What we find beautiful is anything that indicates youth, fecundity, health and symmetrical design. The ancient Greeks believed that all beauty was mathematics. As it said in a quote I saw on the web the other day:  beauty is in the phi of the beholder. Phi is the number 1.618:1 also known as the golden ratio which is a classical measure of beauty that is seen throughout nature. 

Obviously beauty can and does change over the years. When I look at a portrait of Anne Boleyn it is hard to understand why Henry VIII was willing to break with the Vatican over his passion for her. Nature is not the only thing and we do adapt to our cultures and environments. During times of famine the ideal of beauty tends to be a much larger body size, which reflects social status. When the lower classes had to toil away in the fields, to have pale skin was considered the goal. Now of course it is a deep suntan that demonstrates the ability to enjoy leisure time. Obviously cultural mores influence what we find pleasing but remember culture is not created in a vacuum but is a product of human nature among other things.

What are the consequences of how we perceive beauty?  We may pay lip service to the idea that beauty is only skin deep but that is not how we actually behave. There is a new buzzword to describe this socioeconomic phenomenon – erotic capital. As  our society becomes more sexualised, those who are sexier will obtain greater financial rewards.  Preferential treatment of beautiful people and discrimination against the unattractive is not hard to demonstrate. We are probably more aware of racism and sexism because lookism often operates at an unconscious level. We expect good-looking people to be better at a whole range of tasks. They are on average probably better at sex because they start younger and get more practice. And there are also significant economic benefits in such areas as banking, PR and marketing. But these advantages go beyond that.  People working in the better-paid parts of the private sector are more attractive than those in the public and sector. One study claimed that good-looking people can earn 10 to 15 per cent more than the average-looking, who in turn can earn 10 to 15 per cent more than the plain or ugly. The classic example is lawyers where the attractive lawyers earn more and have more chances of becoming partners in a firm. This should not necessarily be put down to employer discrimination; they are just better at attracting customers

It’s all a bit depressing if you ask me. Not only are the beautiful more likely to get laid, they also have a better chance of getting filthy rich too. I feel that we have to treat humans as they are and not as they should be. The attitudes about beauty are deeply ingrained in us.  In her recent book bodies Suzie Orbach argued that we are now manufacturing our bodies. But I think that we have always done that. The feminist movement has had some successes but many young women now reject their worldview and are conforming to different standards. We have always sought to sculpt, shape and adapt our bodies. What is so frightening now is all the means that we have at our disposal.

Beauty quotes

June 26, 2010

Beauty is truth, truth beauty, – that is all

Ye know on earth, and all ye need to know.  John Keats Ode on a Grecian Urn.

When I’m working on a problem, I never think about beauty. I think only how to solve the problem. But when I have finished, if the solution is not beautiful, I know it is wrong. R. Buckminster Fuller

It is amazing how complete is the delusion that beauty is goodness.  Leo Tolstoy

In every man’s heart there is a secret nerve that answers to the vibrations of beauty. Christopher Morley

Beauty always promises, but never gives anything.  Simone Weil

I’m tired of all this nonsense about beauty being only skin-deep.  That’s deep enough.  What do you want – an adorable pancreas?  Jean Kerr

Beauty is unbearable, drives us to despair, offering us for a minute the glimpse of an eternity that we should like to stretch out over the whole of time.  Albert Camus

Remember that the most beautiful things in the world are the most useless; peacocks and lilies, for example. John Ruskin

To me, Beauty is the wonder of wonders…It is only shallow people who do not judge by appearances.  Oscar Wilde

Everything has beauty, but not everyone sees it. Confucius

Beauty is indeed a good gift of God; but that the good may not think it a great good, God dispenses it even to the wicked. St. Augustine

Beauty is not caused. It is. Emily Dickinson

The soul that sees beauty may sometimes walk alone. Johann Wolfgang von Goethe

Beauty is worse than wine, it intoxicates both the holder and beholder.  Aldous Huxley

 From Shallow Hal:

Tony Robbins: Hal, don’t you think you’re being a bit shallow here in the way you look at women?

Hal: Well, no! You know, I’d like her to be into culture and shit, too.

Tony Robbins: Ok Hal, hypothetical situation; Which do you prefer, a girlfriend missing one breast or half a brain?

Hal: Hmmm, toughie. What about the remaining breast? Is it big?

My media week 27/06/10

June 26, 2010

Last week I did a piece about Prohibition and I mentioned the concept of bootleggers and Baptists. On there is an interview with Bruce Yandle explaining what it means. They also have a piece debunking subliminal advertising.

John Kay argues in favour of the separation of banks.

ABC’s All in the Mind looks at Henry Gustav Molaison (known as HM), the most famous patient of 20th century neuroscience. I talked about him in a post I did about memory. After surgery to cure epilepsy, he became a man who lived in the perpetual present. The Remarkable Story of HM: remembering the man without memory.

I shall also be listening to ABC’s The Philosopher’s Zone, which deals with Derrida – the father of deconstruction. I get the impression he is the type of thinker that I’m not going to like but I would like to know more about him.

Prohibition: a noble experiment?

June 20, 2010

Last week I put up a link to a discussion on prohibition on EconTalk. The programme featured Daniel Okrent talking about his latest book called Last Call: The Rise and Fall of Prohibition. I haven’t read the book but it sounds like a fascinating anecdote-rich social history of a policy that would have disastrous consequences. I thought it would be a good idea in this week’s article to look back at this period.

At midnight, on January 16, 1920, the United States went dry as breweries, distilleries, and bars were all shut down. What caused freedom-loving Americans to go down this path? Ever since the Pilgrim Fathers had landed on Plymouth Rock America had been swimming in alcohol. There may have been no cranberry sauce, mashed potatoes or pumpkin pie at the first Thanksgiving, but there was plenty of beer, brandy, gin, and wine. The ship which brought John Winthrop along with other wealthy Puritans to form the Massachusetts Bay Company in 1630 had more beer in its holds than water. And these were the puritans! One of Harvard College’s first construction projects was a brewery to supply America’s best and brightest with a steady supply of beer. In the War of Independence George Washington decreed that every member of the Continental Army would get a daily ration of 4 ounces of whisky. The distillation of whisky led to the first test of federal power, the so-called Whisky Rebellion when Alexander Hamilton introduced an excise tax on whisky. In 1830 the average American drank 26.5 litres of alcohol a year.  Considering that there were a lot of teetotallers, those who were drinking were drinking a hell of a lot. America had a serious problem with booze. But fear not, there were some citizens who believed they had the solution.

Politics makes strange bedfellows and the two sides that lined up against each other in the battle over prohibition illustrate this perfectly. Those in favour of prohibition included women’s suffragists, some Protestants especially Baptists and Methodists, and the Ku Klux Klan. Opposing them were alcohol producers, Catholics and Jews and millions of drinkers. The fact that most of the brewers were of German origin did not help the anti-prohibition case. Names such as Anheuser, Busch, Schlitz, and Coors made it easy for them to be portrayed as a fifth column undermining the strength of the American fighting man. Economists often talk about bootleggers and Baptists. This concept was described by the economist Bruce Yandle; preachers campaign to make alcohol illegal while the criminal bootlegger also wants it to stay illegal because it gives him a business opportunity.

You can see exactly how this all plays out in this description taken from Willie Morris’s memoir North Toward Home

Every so often there would be a vote to determine whether liquor should be made legal. Then, for weeks before, the town would be filled with feverish campaign activity. People would quote the old saying, “As long as the people of Mississippi can stagger to the polls, they’ll vote dry.” A handful of people would come right and say that liquor should be made legal, so that the bootleggers and the sheriffs would not be able to make all the money, and because the state legislature’s “black-market tax” on whiskey, a pittance of a tax that actually contradicted the state constitution, was a shameful deceit. But these voices were few, and most of the campaigning was done by the preachers and the church groups. In their sermons the preachers would talk about the dangers of alcoholism, and the shame of all the liquor ads along the highways in Tennessee and Louisiana, and the temptations this offered the young people. Two or three weeks before the vote, the churches would hand out bumper stickers to put on cars; in big red letters they said, “For the sake of my family, vote dry.” An older boy, the son of one of the most prosperous bootleggers, drove around town in a new Buick, with three of those bumper stickers plastered on front and back: “For the sake of my family, vote dry.”

Prohibition was created by the passing of the 18th amendment and the Volstead Act. The Eighteenth Amendment to the United States Constitution, which was ratified on January 16, 1919, prohibited the production, of “intoxicating liquors.” However, it did not define exactly what “intoxicating liquors” were. The Volstead act, passed on October 28, 1919, filled this void. Any beverage containing more than 0.5% alcohol was considered intoxicating. With these two measures America began its 13-year flirtation with universal sobriety.

What actually happened when prohibition came into force? Not what its proponents had in mind. The rise of gangsters is very well known and I’m not going to go into it here. In fact, it would be wrong to focus exclusively on Al Capone and his ilk. Prohibition was flouted by a much larger part of society. What I really love are all those anecdotes that Okrent provides. One of the stars must be Jorge de la Torre, who had an ecclesiastical approbation from the archbishop of Northern California to sell altar wines to Catholic dioceses throughout the country. Within a couple of years he was making 14 different varieties – including Tokay, Riesling and Cabernet. And I haven’t been able to confirm the following story that I found on the internet but it’s just too good to leave out. It’s about a jury in California that was put on trial after it drank all the evidence in a case against a bootlegger. In their defence the jurors argued that they had been sampling the evidence to determine whether it contained alcohol or not. With all the evidence gone, the alleged bootlegger was acquitted. Religion did not provide the only exceptions; there were also exemptions for medicinal purposes and for farmers enabling them to preserve fruit. Alcohol, then, was not so difficult to find. And many people began making their own alcoholic beverages at home, using bricks of wine. These blocks of wine came with a helpful warning: “After dissolving the brick in a gallon of water, do not place the liquid in a jug away in the cupboard for twenty days, because then it would turn into wine.”

What are the lessons of the failure of prohibition? Okrent’s conclusion is clear:

In almost every respect imaginable, Prohibition was a failure. It encouraged criminality and institutionalized hypocrisy. It deprived the government of revenue, stripped the gears of the political system, and imposed profound limitations on individual rights.”

The most fundamental conclusion is that laws cannot abolish human nature. We should always distinguish between the intentions of governments and the final results, which are often very different. We have the idea that you just pass legislation and you have solved societal problem. The concept of bootleggers and Baptists can be applied to many fields. When some new environmental regulation is brought in, there will be companies who make a lot of money out of this situation allying themselves with greens. And now there will be banking legislation following the recent financial debacle.  But we must not forget the ability of humans to get round such laws. The history of prohibition is indeed a sobering one.

Intoxication metaphors

June 20, 2010

I think I have mentioned George Lakoff’s system for classifying metaphors before. Here he looks at intoxication:


Source Domain: destruction

Target Domain: intoxication

He is stoned

He is bombed

He got thrashed

He was wrecked

He was destroyed

He was blitzed

He was smashed


Source Domain: cooking, heat

Target Domain: intoxication

They were baked.

They were fried.

They were toasted.

They were stewed.


Source Domain: electrification

Target Domain: intoxication

He was wired.

He was lit.


Source Domain: burden

Target Domain: intoxication

She was loaded.

She was tanked up.

My media week 20/06/10

June 20, 2010

The always-controversial Christopher Hitchens makes the case against Prince Charles:

Charles, Prince of Piffle. Here is a flavour of the piece:

We have known for a long time that Prince Charles’ empty sails are so rigged as to be swelled by any passing waft or breeze of crankiness and cant. He fell for the fake anthropologist Laurens van der Post. He was bowled over by the charms of homeopathic medicine. He has been believably reported as saying that plants do better if you talk to them in a soothing and encouraging way. But this latest departure promotes him from an advocate of harmless nonsense to positively sinister nonsense.

Linguist David Crystal has just published a book about language aimed at teenagers but which could be of interest to anyone who loves language. Crystal was interviewed on Talk of the Nation.

Julian Baggini looks at our attitude to risk and the economic value of a human life: Is driving more dangerous than flying through ash?

Savants- beautiful minds in action

June 12, 2010

Without a doubt, the best-known savant is a fictional one — Raymond Babbitt — as portrayed by Dustin Hoffman in the Academy-Award winning movie Rain Man, which made autistic savant a household term. Babbit was a composite character based on a number of different people. One of the major inspirations was a man called Kim Peek, who sadly died last year. Peek had the ability to read simultaneously scanning one page with the left eye, the other one with the right and he memorised over 10,000 books; this human Google had 15 areas of expertise.  However he had an IQ of 87 and his motor skills were so poor that he was unable to brush his teeth.

The original clinical term was Idiot savant and it was coined in 1887 by Dr. J. Langdon Down, a British doctor who is more famous nowadays for his description of the symptoms and characteristics of a genetic disorder that would later be named after him – Down syndrome. Obviously it would now be considered offensive to to say this and so we say savant syndrome or savantism. Although it is not recognized as an official medical diagnosis, the definition of a savant, according to one of the world’s leading authorities Darold Treffert, is: a rare condition in which a person with a developmental disorder has expertise or brilliance in one specific area. I have heard some estimates that there are no more than 50 in the world.

Here is a list of typical savant abilities:

Memorisation In general superior memory is a common feature of savant syndrome, but it also can be a special skill in its own right. Kim Peek was such a man, capable of memorising population statistics, telephone books, bus schedules etc. Peek’s knowledge is a just bout about memorising facts – he is able to understand and see connections between them.

Lightning calculation – This is exhibited in the instantaneous calculation of multiplications, square roots, etc, the determination of prime numbers. Joseph, another savant who helped to inspire Dustin Hoffman’s performance in Rain Man was able to answer questions like this: “What number times what number gives 1,234,567,890?” His instant answer:”9 X 137,174,210.”

Calendar calculating This is the ability to identify the day of the week on which  a particular date falls, which in the case of the twins John and Michael described by Oliver Sacks in  his classic book The Man Who Mistook His Wife for a Hat, was any time in the last, or next, forty thousand years.

Musical ability This is a relatively common savant skill, the co-occurrence of musical genius, blindness and learning disability is a striking feature here. Savants will have perfect pitch, and can play a complete piece of music after hearing it only once. An example of this is Leslie Lemke, who at the of 16, and with no classical music training, got up in the middle of the night and played Tchaikovsky’s Piano Concerto No. 1, flawlessly after having heard it just once on television earlier that evening. Lemke was born with severe birth defects which had forced doctors to remove his eyes. He was adopted by a nurse named May Lemke when he was just six months old. This is a description of how hard his childhood was: “As a young child, Leslie had to be force-fed to teach him how to swallow. He could not stand until he was 12. At 15, Leslie finally learned how to walk (May had to strap his fragile body to hers to teach him, step by step, how to walk).”

Artistic ability – This is not as common as musical virtuosity, but there are savants with exceptional painting, sculpture and especially drawing skills. Stephen Wiltshire, British architectural artist who can draw a landscape after seeing it just once – he is known as the human camera.

Language ability This is fairly rare, but there are cases of savants being able to read write and translate 15 to 20 languages. One famous case is Daniel Tammet, a high-performing autistic savant, who was able to learn enough Icelandic in a week to be able to answer questions in a television interview.  What many say is that they feel like a foreigner in his own country and so learning a foreign language comes naturally to them.

To understand savants it is essential to understand the division of the brain into the left and right hemispheres. Savants tend to have problems in the left hemisphere the one connected with symbolism and interpretation (such as understanding words and body language). But they are very strong in the right area which is much more mechanical.  What seems to be happening with savants is that the right hemisphere is compensating for some damage in the left hemisphere.

What are the basic facts about savantism? Not all autistic people have savant syndrome, and not all those with savant syndrome are autistic. 50% of those with the syndrome are autistic with the other half suffering from other forms of developmental disability, mental retardation, or other CNS (central nervous system) injury or disease. The condition is rare, but around 10% of autistic people show some savant skills. What is true is that males outnumber females by a proportion of six to one.

Savants are indeed fascinating. With modern technology we have learnt more about them in the last 15 years than the previous century. Will we be unable to unravel the mystery of these extraordinary people and their remarkable abilities? As Daniel Tammet has stated he is very lucky to have been born now. People are now much more sensitive to people like him. But it is still a very hard life. I’m sure many would sacrifice their special talents just to be “normal”. But there are others who do not want a cure, but to be accepted. They would not want to give up their own unique minds. We should accept them on their own terms. We can celebrate what makes them different. I will leave the final words to Tammet:

I feel that I have reached a point in my life where I have a partner who loves me. I have friends; I have a career. And I’ve overcome so much to reach the point that I have now, and a part of what I wanted to write about in the book was to show that such a journey is possible from profound isolation and sadness to achievement and happiness, to real happiness. Not just the happiness that comes from giving yourself up to the trends and expectations of others, but the real happiness that can only come from finding what it is that is unique about you and having the courage to live that out.

Check out this link:

10 Most Fascinating Savants in the World

It also contains links to You Tube where you can see many of the incredible people mentioned in this article.

Dead white philosophers

June 12, 2010

These are taken from The Book of Dead Philosophers by Simon Critchley:

Pythagoras allowed himself to be slaughtered rather than cross a field of beans.

Heracleitus suffocated in cow dung.

Plato allegedly died of a lice infestation.

Empedocles plunged into Mount Etna in the hope of becoming a god, but one of his bronze slippers was spat out by the flames in confirmation of his mortality.

Diogenes died by holding his breath.

Zeno of Elea died heroically by biting a tyrant’s ear until he was stabbed to death.

Lucretius is alleged to have killed himself after being driven mad by taking a love potion.

Hypatia was killed by a mob of angry Christians and her skin was peeled off with oyster shells;

Boethius was cruelly tortured before being bludgeoned to death on the orders of the Ostrogoth king Theodoric.

Avicenna died of an opium overdose after engaging much too vigorously in sexual activity.

Aquinas died twenty-five miles from his birthplace after banging his head against the bough of a tree.

Pico della Mirandola was poisoned by his secretary.

William of Ockham died of the Black Death.

Thomas More was beheaded and his head was stuck on a pike on London Bridge.

Giordano Bruno was gagged and burnt alive at the stake by the Inquisition;

Bacon died after stuffing a chicken with snow in the streets of London to assess the effects of refrigeration.

Descartes died of pneumonia as a consequence of giving early-morning tutorials in the Stockholm winter to the prodigious and cross-dressing Queen Christina of Sweden.

Spinoza died in his rented rooms at The Hague while everyone else was at church.

Leibniz, discredited as an atheist and forgotten as a public figure, died alone and was buried at night with only one friend in attendance.

Montesquieu died in the arms of his lover, leaving unfinished an essay on taste.

The atheist, materialist La Mettrie died of indigestion caused by eating a huge amount of truffle pate.

Rousseau died of massive cerebral bleeding which was possibly caused by a violent collision with a Great Dane on the streets of Paris two years earlier.

Diderot choked to death on an apricot, presumably to show that pleasure could be had until the very last breath.

Condorcet was murdered by the Jacobins during the bloodiest years of the French Revolution.

Hume died peacefully in his bed after fending off the inquiries of Boswell as to the atheist’s attitude to death.

Kant’s last word was “Sufficit,” “it is enough.

Hegel died in a cholera epidemic and his last words were “Only one man ever understood me …and he didn’t understand me” (presumably he was referring to himself).

Bentham had himself stuffed and sits on public view in a glass box at University College London in order to maximize the utility of his person.

Max Stirner was stung on the neck by a flying insect and died of the resulting fever.

Nietzsche made a long, soft-brained and dribbling descent into oblivion after kissing a horse in Turin.

Moritz Schlick was murdered by a disturbed student who went on to join the Nazi Party.

Wittgenstein died the day after his birthday, for which his friend Mrs. Bevan gave him an electric blanket saying “Many happy returns;” Wittgenstein replied, staring at her, “There will be no returns.”

Simone Weil starved herself to death for the sake of solidarity with occupied France in the Second World War.

Edith Stein died in Auschwitz.

Merleau-Ponty was allegedly discovered dead in his office with his face in a book by Descartes.

Roland Barthes was hit by a dry cleaning van after a meeting with the future French minister for culture.

Freddie Ayer had a near-death experience where he reportedly met the masters of the universe after choking on a piece of salmon.

Gilles Deleuze defenestrated himself from his Paris apartment in order to escape the sufferings of emphysema.

Derrida died of pancreatic cancer at the same age as his father, who died of the same disease.

My media week 13/06/10

June 12, 2010

The Washington Post had this piece arguing in favour of Marriage equality for all couples. Here is part of the article:

Although we serve, respectively, as president of a progressive and chairman of a libertarian think tank, we are not joining the foundation’s advisory board to present a “bipartisan” front. Rather, we have come together in a nonpartisan fashion because the principle of equality before the law transcends the left-right divide and cuts to the core of our nation’s character. This is not about politics; it’s about an indispensable right vested in all Americans.


On EconTalk Daniel Okent, the author of Last Call: The Rise and Fall of Prohibition, talked with Russ Roberts about that crazy policy.

In The New York Times Steven Pinker argues against paranoia about new media: Mind Over Mass Media.


The Onion had this video: Do Glass Pipes, Incense Prove Teens Are Practicing Shamanism?


The Daily Mash had a  special World Cup reader offer as well as PREGNANT WOMEN TO BE LABELLED.

The crisis

June 4, 2010

The current economic crisis has been a shock to the system. A little local difficulty involving sub-prime loans has now morphed into a major crisis of public finance. I must admit that I am struggling to understand all of its implications. However I have a feeling that I am not alone in this. While crises are not new, the massive bailout and stimulus package are unprecedented and we really are in uncharted territory. How are governments going to get back to fiscal equilibrium? We now face a structural crisis in public finance. It was there before but the crisis has served to expose it.

 What caused the crisis? If you want an extensive list, you can’t go wrong with the one in a paper produced by Mark Jickling of the U.S. Congressional Research Office  It contains no less than 26 causes of the crisis:

  1. imprudent mortgage lending
  2. housing bubble
  3. global imbalances
  4. securitization
  5. lack of transparency and accountability in mortgage finance
  6. rating agencies
  7. mark-to-market  accounting
  8. deregulatory legislation
  9. shadow banking system
  10. non-bank runs
  11. off-balance sheet  finance
  12. government-mandated subprime lending
  13. failure of risk management systems
  14. financial innovation
  15. complexity
  16. human frailty
  17. bad computer models
  18. excessive leverage
  19. relaxed regulation of leverage
  20. credit default swaps (CDs)
  21. over-the-counter derivatives
  22. fragmented regulation
  23. no systemic risk regulator
  24. short-term incentives
  25. tail risk
  26. Black Swan theory

 Whenever you get a crisis there are competing narratives. Those on the left talk about greed and deregulation. If you are a free market supporter then you can focus on government intervention in the housing market or the Fed’s lax policy on interest rates.   I don’t plan to give a definitive answer to what caused the recession and how to get out of it. Economists are still debating similar questions about The Great Depression and there is nothing like a consensus. And anyway if I knew the answers, I certainly wouldn’t be working in teaching.

 Clearly a lot of mistakes were made. Of course we have to argue what motivated those mistakes? Was it because of an inherent flaw in capitalism? Why did many highly-paid top executives run their banks into the ground? I can accept the idea of a flaw in capitalism. I do tend to think that boom and bust are inevitable within the system. I base that on history. It’s happened in the past and whatever people say about new paradigms should be taken with a huge salt mine.

 For me greed is a human given but it’s not particularly useful to explain why this crisis happened now. I think that perverse incentives played a huge role. The principal-agent problem helps explain how many managers acted in their interests, which were not aligned with those of the bank. I am also worried about moral hazard. I don’t know how this influenced the behaviour of the banks’ decision-makers. The problem is that after what happened with Lehman Brothers what was an implicit guarantee of being bailed out has now become explicit. And this has been combined with a greater concentration in the banking sector strengthening the idea of too big to fail. Bailouts contradict what I believe about capitalism being a system of profit and loss. The loss part is as important as the profit part. It sends a message that this behaviour is wrong. I have no problem with people taking risks but they have to pay the consequences of their irresponsibility. But when the shit hits the fan it is very difficult for governments not to step in.  I am not a fan of Paul Krugman but there is lot of truth in that quote of his; “There are no atheists in foxholes and there are no libertarians in financial crises.”

 What is going to happen now? We are facing difficult days. Medicine has been given to the patient and a great depression has been averted so far. But now we have to face up to the consequences. The huge debt problems faced by a number of Western governments are going to put a lot of pressure on these governments and their citizens. It’s all very well to blame speculators but they are just exposing the fundamental weaknesses of many economies.

 There will also have to be reforms. It may sound simplistic but I would like to see a separation between retail banks and investment banks. I am sure there are loads more changes that could make banks more robust. However forgive me for being a little sceptical of politicians and regulators but experience does not fill me with optimism. Basel I and II have not exactly been successful in preventing this crisis. I would also hope to see less leverage and an end to the Byzantine complexity that has emerged over the last few decades.

 But I don’t see this as the crisis to end all crises. Now there is pain but later it will be forgotten. The Onion captured this feeling in a piece a couple of years ago:

A panel of top business leaders testified before Congress about the worsening recession Monday, demanding the government provide Americans with a new irresponsible and largely illusory economic bubble in which to invest.

“What America needs right now is not more talk and long-term strategy, but a concrete way to create more imaginary wealth in the very immediate future,” said Thomas Jenkins, CFO of the Boston-area Jenkins Financial Group, a bubble-based investment firm. “We are in a crisis, and that crisis demands an unviable short-term solution.”

The current economic woes, brought on by the collapse of the so-called “housing bubble,” are considered the worst to hit investors since the equally untenable dot-com bubble burst in 2001. According to investment experts, now that the option of making millions of dollars in a short time with imaginary profits from bad real-estate deals has disappeared, the need for another spontaneous make-believe source of wealth has never been more urgent.