Google’s headaches about YouTube keep mounting including the fact that they can’t figure out how to sell ads there. Now they’re being forced by Viacom to hand over user information (that’s including you and me) about who’s accessing their videos on YouTube. Needless to say, many other media outlets jumped in to say how this won’t win Viacom any fans including Cnet who point out how it makes Google look good plus this Seattle Post-Intelligence article pointing out how futile the suit is. But as this Information Week article points out, Google ain’t exactly angels when it comes to privacy.
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That we measure consumer confidence and sentiment and report the figures with great portentousness has always troubled me. It’s not just the unsettling implication that the intention to consume more is inherently good, and a positive sign for all of us—though that has certainly contributed to the wasteful, throwaway economy we currently enjoy, in which sensibly reusing goods registers as damage to the economic picture. But is there really something all that relevant in how people feel about spending their money? Shouldn’t we stick to the data about what they are actually doing? Surveys seem an especially dubious way to get at the truth, given that people routinely exaggerate or misrepresent their behavior when they are put in the spotlight and are taken seriously for once. But the scrutiny to which economists and policymakers subject these figures is enough to lead one to suspect that the economy runs on nothing but optimism—that what is produced and sold is in a way secondary or even beside the point. What’s scary is that this might be true.
Yesterday in the FT Wolfgang Münchau mentioned (and dismissed) the possibility that the world economy has reached what is known as a Minsky moment.
Hyman Minsky, the 20th century US economist, formulated the long forgotten, and recently rediscovered, financial instability hypothesis, according to which capitalist economies, after a long period of prosperity, end up in a vicious circle of financial speculation. The Minsky moment is the point when what economists call this “Ponzi game” collapses.
The WSJ‘s Justin Lahart offered this more specific explanation last year:
At its core, the Minsky view was straightforward: When times are good, investors take on risk; the longer times stay good, the more risk they take on, until they’ve taken on too much. Eventually, they reach a point where the cash generated by their assets no longer is sufficient to pay off the mountains of debt they took on to acquire them. Losses on such speculative assets prompt lenders to call in their loans. “This is likely to lead to a collapse of asset values,” Mr. Minsky wrote. When investors are forced to sell even their less-speculative positions to make good on their loans, markets spiral lower and create a severe demand for cash [that can force central bankers to lend a hand]. At that point, the Minsky moment has arrived.
In other words, risky assets are sold along a chain of investors, with each investor confident they will be able to sell the asset along to a bigger sucker and take profits in the process. Eventually, though, investors run out of suckers, the accumulated debt engenders fire sales and spiraling depreciation, and central banks are forced to become suckers of last resort. Vox EU’s compendium of analyses of the subprime crisis offers this description the logic leading to a Minsky moment: it “starts with unrealistically high asset prices and buildups of leverage based on momentum effects, myopic expectations and widespread overleveraging of consumers and firms.” Myopic expectations seems a good way to describe what surveys about consumer sentiment and confidence are likely to record, no matter how far in the future the time period is that the people surveyed are supposed to prognosticate about. It seems possible that such surveys have the effect of fostering myopic expectations, generating a seemingly statistical and sound basis for such optimistic feelings (that is, while the Minsky moment is building). The consumer opinion measures are trailing indicators that often are passed off as leading indicators, so they incubate optimism even when people are starting to wonder where the next sucker is. Such surveys are not passive gauges but are actively constructing the sort of sentiment it seeks to measure by the momentum of its own periodicity and the assumptions built into the questions, that consumerism is rational and reflective rather than impulsive with motives poorly understood even by those caught up in them.
What precipitates a Minsky moment is some vague awareness that things can’t go on forever, but it’s not clear what triggers it. John Cassidy notes in this New Yorker essay about Minsky moments that “the onset of panic is usually heralded by a dramatic effect,” but that is to say it’s only apparent after the fact. The inevitable end seems a problem for game theory: Tyler Cowen linked yesterday to an excerpt from Richard Tuck’s new book, Free Riding, which aims to make the case that individual action is meaningful even when the difference it makes seems indiscernible. In the excerpt, he looks at the prisoner’s dilemma and notes that cooperation among participants can develop as long as no one believes the end of the game is near:
There is now a large literature examining the possible strategies which can arise in repeated games of this sort. An obvious one, which is the subject of a whole book by Robert Axelrod, is ‘tit for tat’: if you defect from our common enterprise and make me suffer, next time round I will defect and make you suffer, and so on until we end up co-operating. This is also in effect what has been suggested by modern economists as the correct strategy for firms under oligopolistic conditions. Of course, if we know the games are going to end at a determinate point, tit for tat ceases to make sense as a strategy as the last round approaches, though precisely where it ceases has been a matter for debate. Strictly speaking, prior knowledge of where the sequence of games will end ought to dictate non-co-operation in every round.
If the consumer-driven economy is one big prisoner’s dilemma—one in which it makes sense to extend credit only if you suspend what seems to be your dominant strategy—then it’s imperative that the end of the game never seems near and that continuing the game almost becomes more important than winning it. Only the players are playing to win, not merely to play—though merely playing may be analogous with the inherent benefits of living in a prosperous society. (In other words, there aren’t consumer-confidence surveys in Zimbabwe.) But the cooperation in this case becomes a kind of momentum-driven speculative mania, with each tit-for-tat raising the overall stakes and leaving a residual of mounting risk. Eventually this risk appears to outweigh the gains of cooperation—even the circumscribed ones presumed by accepting implicit cooperation as a strategy. “At some point,” Tuck writes, “the players will decide that the end is close enough to abandon this strategy and move to full non-cooperation.” This is the point at which they no longer fear reprisals from the other participants, where they see trust as a scam, possibly because they see their own trustworthiness as dubious.
Consider this story from today’s FT, which begins:
Credit rating agencies failed to properly manage conflicts of interest in assigning top ratings to bonds backed by subprime mortgages and other assets, the Securities and Exchange Commission has concluded.
And this story, in which Gillian Tett notes, “Few bankers want to hear dissent about the models when they are enjoying a profit bonanza. Greed is what drives much of the modern financial world—combined with fear of getting sacked.” Greed and fear, however, seem to be motives pulling the economy in opposite directions; their tension supplies the dialectic that may have the economy careening from bubble to bubble, from Minsky moment to Minsky moment. Or it might allow, in Münchau’s phrase, for “Minsky’s moment to become an eternity.”
It looks bigger than it actually is, if that’s physically possible. A 720-page tome that lands with an imposing, Tolstey-esque thud on any surface it might happen to be dropped upon, Dash Shaw’s Bottomless Belly Button (Fantagraphics, June 2008, $29.95) is a serious brick of a thing, which may actually work against it. As Shaw notes on the title page (after identifying the work to follow as “not for children”), the book that follows is divided into three parts, and readers should “take breaks from reading between them.” Given the propensity of the reading public to avoid most things this hefty that aren’t the Bible, it might have made sense to split Shaw’s work into three, less-imposing volumes. It’s fortunate, though, that they didn’t, because—Shaw’s admonition to the contrary—no breaks are necessary or even desired while reading Bottomless Belly Button; he’s right, though, that it’s not for children.
While Shaw’s novel gives off the first appearance of something culled from the darker fringes of the graphic novel universe, where magical realism and nonsensical happenstance are the rule of the day, its root story is a well-examined dissection of the family, in extremis; in other words, the bread and butter of American fiction. The Loony family (it’s an admittedly weak joke, almost saved by its pointed obviousness) is a four-decade-old amalgamation of dissatisfied children and quietly seething parents, the latter of whom have just announced that they are getting a divorce. Shaw builds to the ramifications of this decision after laying out the family history and current situation in a series of flashbacks and diagrams, even including some helpful piecharts. It’s a pointedly scientific beginning to what promises to be a disagreeable mess of a meltdown.
Arriving at the family’s beachside house to deal with the ramifications of the divorce, the Loonys face their several grown children, none of whom seem to have any ability to function in the world they’ve long since decamped for. The oldest, Dennis, is a blowhard with a wife who seems on the verge of leaving. Claire is divorced herself, with a teenage daughter, sullen behind goggle-like glasses. The youngest sibling is Peter, a slacker pothead of a filmmaker who seems disengaged from most human activity, until he falls for a beautiful woman living further down the beach. (In one of the book’s only nods to comic surreality, Peter is drawn as a human with a frog’s face, the reason for which is only revealed in a couple of frames much later in the book.) In the finest tradition of dysfunctional family fiction, the Loony spends most of the book sniping at each other, coming to grips with their parents (whose blasé announcement and blank reactions to it only add fuel to the fire), and occasionally digging up long-buried secrets (the house has a secret compartment, always handy in these situations).
Shaw’s story is bereft in many ways of forward momentum, instead hanging about in the fraught spaces between these people, so alike in their dissimilar miseries, and peeling back the layers of sadness and disappointment. While his art bears some resemblance to the bristly realism of Jeffery Brown, Shaw has a cleaner style, displaying the nonpicturesque realities of life (runny noses, hairy backs, flopping genitalia) while still looking outward to reveal some unfathomable beauties. It’s an invigorating mix, one sure to win over at least a few fans from the non-comic-reading side of the aisle. Big, but not daunting, funny and sad without being either slapstick or tragic, Bottomless Belly Button is sensuous and grounded graphic fiction of the highest order.
PopMatters trekked out to Fitzgerald’s annual American Music Festival to catch legendary Texas singer-songwriter Joe Ely play a smoking set with accordionist Joel Guzman. While waiting to soak up the sonic, soulful talent of Joe and Joel live—what a privilege and a pleasure—we caught a bit of traditional New Orleans jazz from the Salty Dogs and NOLA brass band music from the BS Brass Band, too. Eager to hear Ely and Guzman, we only caught part of Rosie Flores and the Pine Valley Cosmonauts, but Rosie joined Joe and Joel to perform the second encore. The stomping, shouting crowd just didn’t want to let them go.
We highly recommend this annual event held at one of Chicago area’s best music venues.
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Sundance Channel’s Live from Abbey Road has returned for a second season. The popular original series once again features rehearsals, interviews and performances set inside the legendary London studios. One of the biggest strengths of the show is that it features such an eclectic mix of artists from many genres, and at all points of what is considered a successful career. Mid-career bands mingle with up-and-comers, and lesser-knowns are alongside legends.
Episode four, airing this week (Thursday, July 10 at 10 p.m. Eastern and Pacific), showcases Stereophonics, Colbie Caillat and Joan Armatrading. Diversity like this is not easily found at a summer music festival, let alone on your television schedule! It’s interesting to see how these artists react to being in the hallowed Studio 1, and although they are being followed about by what must be an enormous production crew, the entire affair feels very intimate. The best thing about this show, for me anyway, is that the joy in the performances is quite evident, as is the fact that the interviews are freely candid—no rehearsed and rehashed sound bites here! Personally, I loved episode four because I grew up on my mother’s Joan Armatrading albums (and it’s great to hear her discussing guitars in detail!), and I’m a massive Stereophonics fan, but I also enjoyed the exposure to the soulful, singer/songwriter stylings of Colbie Caillat, with whom I was previously unfamiliar.
Live from Abbey Road has a little something for everyone, it seems. Casual viewers, music lovers and even the featured artists themselves (in episode three Panic at the Disco were obviously pleased to be able to perform a stellar cover of the Band’s “The Weight”, while this week, Caillat warms up with a brief, impromptu version of Bob Marley’s “No Woman, No Cry” that clearly thrills her.). If each episode is as consistently as good as this one, Sundance Channel may have to expand the series beyond its 12-part format.