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DOCS: US MISERY INDEX . Check It Out...

2012-01-03T19:55:00.003+01:00

US MISERY INDEX OUTLOOK

The US Misery Index - 1948 to 2010

Misery Index = Unemployment rate + Inflation rate

1948	11.49	Truman
1949	5.10
1950	6.30
1951	11.16
1952	5.32
1953	3.74	Eisenhower
1954	5.91
1955	4.09
1956	5.64
1957	7.64
1958	9.57
1959	6.46
1960	7.00
1961	7.76	Kennedy
1962	6.77
1963	6.88	Johnson
1964	6.44
1965	6.10
1966	6.80
1967	6.62
1968	7.83
1969	8.95	Nixon
1970	10.82
1971	10.25
1972	8.87
1973	11.02
1974	16.67	Ford
1975	17.68
1976	13.45
1977	13.55	Carter
1978	13.69
1979	17.07
1980	20.76
1981	17.97	Reagan
1982	15.87
1983	12.82
1984	11.81
1985	10.74
1986	8.91
1987	9.84
1988	9.57
1989	10.09	Bush, G.H.W.
1990	11.01
1991	11.10
1992	10.52
1993	9.87	Clinton
1994	8.71
1995	8.40
1996	8.34
1997	7.28
1998	6.05
1999	6.41
2000	7.35
2001	7.59	Bush, G.W.
2002	7.37
2003	8.26
2004	8.21
2005	8.48
2006	7.87
2007	7.46
2008	9.61
2009	8.92	Obama
2010	11.29

SOURCE

http://miseryindex.us/customindexbyyear.asp?StartYear=1948&EndYear=2010

SELECTED BLOGS: ECONOBROWSER// A Call for Action: Conditional Inflation Targetting

2012-01-03T07:41:00.001+01:00

the burden of government debt | Main

January 02, 2012

A Call for Action: Conditional Inflation Targetting

From an article by myself and Jeffry Frieden in the newly released Foreign Policy:

[We need] inflation -- just enough to reduce the debt burden to more manageable levels, which probably means in the 4 to 6 percent range for several years. The Fed could accomplish this by adopting a flexible inflation target, one pegged to the rate of unemployment. Chicago Fed President Charles Evans has proposed something very similar, a policy that would keep the Fed funds rate near zero and supplemented with other quantitative measures as long as unemployment remained above 7 percent or inflation stayed below 3 percent. Making the unemployment target explicit would also serve to constrain inflationary expectations: As the unemployment rate fell, the inflation target would fall with it.

Today our highest priority should be to stimulate investment, growth, and employment. Raising the expected inflation rate will lower real interest rates and spur investment and consumption. It will also make it difficult for the de facto dollar peggers, such as China, to sustain their policies. The resulting real depreciation of the dollar would stimulate production of U.S. exports and domestic goods that compete with imports, boosting American production. The United States would get faster growth, an accelerated process of deleveraging, a quicker recovery, and a firmer foundation upon which to address long-term fiscal problems.

We believe a similar policy regime is necessary for the euro area. Figure 1 highlights the distance we still need to go in the US to achieve a level of leverage consistent with resumed consumption growth.

Figure 1: "At current speed of de-leveraging we will reach pre-bubble level of debt/income in 2013" from Torsten Slok, "US Consumer Deleveraging: More adjustment needed," Deutsche Bank, December 2011.

This proposal follows from the conclusions we made in Lost Decades:

Americans face serious economic challenges. They lost the first decade of the century to a boom that enriched the wealthiest, and a subsequent bust that impoverished the rest. Now they risk losing another decade to an incomplete recovery and economic stagnation.

None of the changes necessary to avoid a repeat of this disaster will be easy. At every turn there are major political obstacles. Financial interests resist regulations that shift the burden of risky behavior back onto them and off of taxpayers. Beneficiaries of government programs fight against attempts to curb their benefits. Taxpayers refuse to pay the taxes needed to pay for the programs they want. Partisan politicians block reasoned discussion, suggesting absurd pseudo-solutions instead of realistic alternatives. Ideologues and political opportunists encourage Americans to cling to the childish things that have served them so poorly in the past: a mindless belief that markets are perfect, that tax cuts solve every ill, that borrowing is to be encouraged. Despite the great trouble these policies have caused, their attractions continue to be touted and spouted by unprincipled pundits.

Of these childish things is an unwarranted fear of inflation.

Figure 2: Implied inflation calculated as difference between constant maturity TIPS yields on five year Treasurys (blue), seven year (chartreuse), and ten year (red). Observations for December apply to December 28th observation. Source: St. Louis Fed FRED, and author’s calculations.

Link to Menzie Chinn and Jeffry Frieden, "How to save the global eocnomy: Whip up inflation. Now," Foreign Policy December/January 2012.

Posted by Menzie Chinn at January 2, 2012 06:01 PM

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INTRIGUING ARTICLES: NOBODY UNDERSTANDS DEBT, PAUL KRUGMAN // IS IT REALLY SO?

2012-01-02T15:32:00.000+01:00

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IS IT REALLY TRUE? NOBODY UNDERSTANDS DEBT?
I DO ADVANCE MY PERSONAL DOUBT ON KRUGMAN'S TOO BOLD STATEMENT. AS WELL AS ON OTHER PLAIN VANILLA POINTS...TOO PLAIN VANILLA.

MAYBE.

SOME VERY QUALIFIED READERS HAVE ARGUED ON THIS ARTICLE.

Oreiginal link _ http://www.nytimes.com/2012/01/02/opinion/krugman-nobody-understands-debt.html?_r=1&src=tp

Nobody Understands Debt

By PAUL KRUGMAN

Published: January 1, 2012

This misplaced focus said a lot about our political culture, in particular about how disconnected Congress is from the suffering of ordinary Americans. But it also revealed something else: when people in D.C. talk about deficits and debt, by and large they have no idea what they’re talking about — and the people who talk the most understand the least.

Perhaps most obviously, the economic “experts” on whom much of Congress relies have been repeatedly, utterly wrong about the short-run effects of budget deficits. People who get their economic analysis from the likes of the Heritage Foundation have been waiting ever since President Obama took office for budget deficits to send interest rates soaring. Any day now!

And while they’ve been waiting, those rates have dropped to historical lows. You might think that this would make politicians question their choice of experts — that is, you might think that if you didn’t know anything about our postmodern, fact-free politics.

But Washington isn’t just confused about the short run; it’s also confused about the long run. For while debt can be a problem, the way our politicians and pundits think about debt is all wrong, and exaggerates the problem’s size.

Deficit-worriers portray a future in which we’re impoverished by the need to pay back money we’ve been borrowing. They see America as being like a family that took out too large a mortgage, and will have a hard time making the monthly payments.

This is, however, a really bad analogy in at least two ways.

First, families have to pay back their debt. Governments don’t — all they need to do is ensure that debt grows more slowly than their tax base. The debt from World War II was never repaid; it just became increasingly irrelevant as the U.S. economy grew, and with it the income subject to taxation.

Second — and this is the point almost nobody seems to get — an over-borrowed family owes money to someone else; U.S. debt is, to a large extent, money we owe to ourselves.

This was clearly true of the debt incurred to win World War II. Taxpayers were on the hook for a debt that was significantly bigger, as a percentage of G.D.P., than debt today; but that debt was also owned by taxpayers, such as all the people who bought savings bonds. So the debt didn’t make postwar America poorer. In particular, the debt didn’t prevent the postwar generation from experiencing the biggest rise in incomes and living standards in our nation’s history.

But isn’t this time different? Not as much as you think.

It’s true that foreigners now hold large claims on the United States, including a fair amount of government debt. But every dollar’s worth of foreign claims on America is matched by 89 cents’ worth of U.S. claims on foreigners. And because foreigners tend to put their U.S. investments into safe, low-yield assets, America actually earns more from its assets abroad than it pays to foreign investors. If your image is of a nation that’s already deep in hock to the Chinese, you’ve been misinformed. Nor are we heading rapidly in that direction.

Now, the fact that federal debt isn’t at all like a mortgage on America’s future doesn’t mean that the debt is harmless. Taxes must be levied to pay the interest, and you don’t have to be a right-wing ideologue to concede that taxes impose some cost on the economy, if nothing else by causing a diversion of resources away from productive activities into tax avoidance and evasion. But these costs are a lot less dramatic than the analogy with an overindebted family might suggest.

And that’s why nations with stable, responsible governments — that is, governments that are willing to impose modestly higher taxes when the situation warrants it — have historically been able to live with much higher levels of debt than today’s conventional wisdom would lead you to believe. Britain, in particular, has had debt exceeding 100 percent of G.D.P. for 81 of the last 170 years. When Keynes was writing about the need to spend your way out of a depression, Britain was deeper in debt than any advanced nation today, with the exception of Japan.

Of course, America, with its rabidly antitax conservative movement, may not have a government that is responsible in this sense. But in that case the fault lies not in our debt, but in ourselves.

So yes, debt matters. But right now, other things matter more. We need more, not less, government spending to get us out of our unemployment trap. And the wrongheaded, ill-informed obsession with debt is standing in the way
.

SELECTED BLOGS: THE PHISICS OF FINANCE, MARK BUCHANAN// The Higgs Boson -- and the value of money

2011-12-30T20:18:00.002+01:00

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ORIGINAL LINK TO : higgs-boson-and-value-of-money

Thursday, December 22, 2011

The Higgs Boson -- and the value of money

What does the (tentatively discovered) Higgs Boson have to do with finance? Nothing. At least nothing obvious. Still, it's a fascinating topic with grand sweeping themes. I've written an essay on it for Bloomberg Views, which will appear later tonight or tomorrow. I'll add the link when it does.

The interesting thing to me about the Higgs Boson, and the associated Higgs field (the boson is an elementary excitation of this field), is the intellectual or conceptual history of the idea. It seems crazy to think that as the universe cooled (very shortly after the big bang) a new field, the Higgs field, suddenly appeared, filling all space, and giving particles mass in proportion to how strongly they interact with that field. It would be a crazy idea if it were just a proposal pulled out of thin air. But the history is that Higgs' work (and the work of many others at the same time, the early 1960s) had very strong stimulation from the BCS theory of superconductivity of ordinary metals, which appeared in 1957.

That theory explained how superconductivity originates through the emergence below a critical temperature of a condensate of paired electrons (hence, bosons) which acts as an extremely sensitive electromagnetic medium. Try to impose a magnetic field inside a superconductor (by bringing a magnet close, for example) and this condensate or field will respond by stirring up currents which act precisely to cancel the field inside the superconductor. This is the essence of superconductivity -- its appearance changes physics inside the superconductor in such a way that electromagnetic fields cannot propagate. In quantum terms (from quantum electrodynamics), this is equivalent to saying that the photon -- the carrier of the electromagnetic fields -- comes to have a mass. It does so because it interacts very strongly with the condensate.

This idea from superconductivity is pretty much identical to the Higgs mechanism for giving the W and Z particles (the carriers of the weak force) mass. This is what I think is fascinating. The Higgs prediction arose not so much from complex mathematics, but from the use of analogy and metaphor -- I wonder if the universe is in some ways like a superconductor? If we're living in a superconductor (not for ordinary electrical charge, but for a different kind of charge of the electroweak field), then it's easy to understand why the W and Z particles have big masses (more than 100 times the mass of the proton). They're just like photons traveling inside an ordinary superconductor -- inside an ordinary metal, lead or tin or aluminum, cooled down to low temperatures.

I think it's fitting that physics theory so celebrated for bewildering mathematics and abstraction beyond ordinary imagination actually has its roots in the understanding of grubby things like magnets and metals. That's where the essential ideas were born and found their initial value.

Having said that none of this has anything to do with finance, however, I should mentiona fascinating proposal from 2000 by Per Bak, Simon Nørrelykke and Martin Shubik, which draws a very close analogy between the process which determines the value of money and any Higgs-like mechanism. They made the observation that the absolute value of money is essentially undetermined:

The value of money represents a “continuous symmetry”. If, at some point, the value of money was globally redefined by a certain factor, this would have no consequences whatsoever. Thus, in order to arrive at a specific value of money, the continuous symmetry must be broken.

In other words, a loaf of bread could be worth $1, $10, or $100 -- it doesn't matter. But here and now in the real world it does have one specific value. The symmetry is broken.

This idea of continuous symmetry is something that arises frequently in physics. And it is indeed the breaking of a continuous symmetry that underlies the onset of superconductivity. The mathematics of field theory shows that, anytime a continuous symmetry is broken (so that some variables comes to take on one specific value), there appears in the theory a new dynamical mode -- a so-called Goldstone Mode -- corresponding to fluctuations along the direction of the continuous symmetry. This isn't quite the appearance of mass -- that takes another step in the mathematics, but this Goldstone business is a part of the Higgs mechanism.

I'll try to return to this paper again. It offers a seemingly plausible dynamical model for how a value of money can emerge in an economy, and also why it should be subject to strong inherent fluctuations (because of the Goldstone mode). None of this comes out of equilibrium theory, nor should one expect it to as money is an inherently dynamical thing -- we use it as a tool to manage activities through time, selling our services today to buy food next week, for example.

SELECTED BLOGS: WIRED/Are Smart People Getting Smarter?

2011-12-28T13:07:00.001+01:00

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Are Smart People Getting Smarter?

By Jonah Lehrer

The Flynn effect has always been tinged with mystery. First popularized by the political scientist James Flynn, the effect refers to the widespread increase in IQ scores over time. Some measures of intelligence — such as performance on Raven’s Progressive Matrices in Des Moines and Scotland — have been increasing for at least 100 years. What’s most peculiar is how scores have increased:

1) Scores have increased the most on the problem-solving portion of intelligence tests.
2) Verbal intelligence has remained relatively flat, while non-verbal scores continue to rise.
3) Performance gains have occurred across all age groups.
4) The rise in scores exists primarily on those tests with content that does not appear to be easily learned.

What’s puzzling about this increase in general intelligence is that it appears where we’d least expect it. While one might assume that IQ scores could increase over time in terms of crystallized intelligence — the part of the test that measures particular kinds of knowledge, such as being able to count or vocabulary words — it’s actually increased on measures of fluid intelligence, which is the ability to solve abstract problems. This has led some psychologists, such as Ian Dreary, to conclude that “largedifferences in scores [between generations] are demonstrated in just those situations where similaritywould be expected.” Flynn, meanwhile, marveled at the magical constancy of the effect: “It’s as if some unseen hand is propelling scores upward,” he wrote.

There is, of course, no unseen hand. In recent years, many psychologists have embraced the “multiplicity hypothesis” which argues that the Flynn effect is explained by a long list of factors, such as improvements in early education (especially for girls), removal of lead paint, increased sophistication of tests, better test taking attitudes and adequate nutrition.

However, despite the flurry of interest in the Flynn effect, one lingering question has remained unanswered: Does the effect apply to everyone? More specifically, does it apply to the right tail of the ability distribution, or those 5 percent of individuals who score highest on the IQ test? What makes this mystery particularly noteworthy is that many of the explanations for the Flynn effect seem particularly relevant to the left side of the bell curve, or those with below average scores. This suggests that most of the intelligence gains have come from solving low hanging fruit, fixing those glaring societal inequalities that meant millions of children lacked access to adequate food, education and medical care. Since we’ve made progress on these problems, one might suppose that the Flynn effect would start to fade, at least in developed nations. (All the low hanging fruit is gone, as Tyler Cowen might say.) Sure enough, somestudies have concluded that the Flynn effect has begun to disappear in Denmark, Norway and Britain.

A brand new study, “The Flynn Effect Puzzle,” currently in press at Intelligence, and led by Jonathan Waiat Duke University, has found an interesting way to assess the right tail of the distribution. By looking at approximately 1.7 million scores of 7th grade students between 1981 and 2000 on the SAT and ACT, as well as scores of 5th and 6th grade students on the EXPLORE test, the psychologists were able to investigate the extent to which the Flynn effect exists in the right tail of the bell curve. The results were clear:

The effect was found in the top 5% at a rate similar to the general distribution, providing evidence for the first time that the entire curve is likely increasing at a constant rate. The effect was also found for females as well as males, appears to still be continuing, is primarily concentrated on the mathematics subtests of the SAT, ACT, and EXPLORE, and operates similarly for both 5th and 6th as well as 7th graders in the right tail.

In other words, the Flynn effect doesn’t appear to be solely caused by rising scores among the lowest quartile. Rather, it seems to be just as prevalent among the top 5 percent. The smartest are getting smarter.

What might be causing this aspect of the Flynn effect? Obviously, it’s harder to explain using the low hanging fruit hypothesis, since these students (even in 1981) were probably well fed and had access to math education. This leads the scientists to focus on new forms of “environmental stimulation” as a likely explanation:

Rowe and Rodgers (2002) noted that “If the rising mean were driven by the smart getting smarter, then the change might reflect the introduction of some qualitatively novel form of environmental stimulation. If the overall distribution increased in pace, the cause would lie in processes that affected everyone equally.” We find the rising mean of the entire distribution is partly driven by the smart getting smarter. This suggests some form of environmental stimulation may be at work in the right tail.

The question, of course, is what this stimulation might consist of? It obviously has to be extremely widespread, since the IQ gains exist at the population level. One frequently cited factor is the increasing complexity of entertainment, which might enhance abstract problem solving skills. (As Flynn himself noted, “The very fact that children are better and better at IQ test problems logically entails that they have learned at least that kind of problem-solving skill better, and it must have been learned somewhere.”) This suggests that, because people are now forced to make sense of Lost or the Harry Potter series or World of Warcraft, they’re also better able to handle hard logic puzzles. (The effect is probably indirect, with the difficult forms of culture enhancing working memory and the allocation of attention.) As Steven Johnson argued, everything bad is good for us, especially when the bad stuff has lots of minor characters and subplots. HBO is a cognitive workout.

That said, environmental stimulation remains an incomplete explanation. Even for those on the right side of the curve, intelligence gains probably have many distinct causes, from the complexity of The Wire to the social multiplier effect, which is the tendency of smart people to hang out with other smart people. (In this sense, gifted programs in schools might help drive IQ gains among the top five percent. The Internet probably helps, too.) The question, of course, is whether such factors have really changed over time. Has it gotten easier for smart people to interact with each other? Are those on the right side of the IQ distribution now more likely to have children together? Would the Flynn effect be even larger if we did more of [fill in the blank]? These questions have no easy answers, but at least we now know that they need to be answered.

In the meantime, it’s wise to be modest about what we know about population changes in IQ over time; the Flynn effect remains a paradox. As Flynn himself observed, “No one knows which role IQ gains over time will eventually play.”

SELECTED BLOGS: ALPHAVILLE//Abstractions and morality in modern finance By LISA POLLACK

2011-12-28T08:50:00.002+01:00

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Abstractions and morality in modern finance

Posted by Lisa Pollack on Dec 23 16:00.

Over the last three years, modern finance has been bailed out by policymakers and, by extension, taxpayers. But policymakers and financiers are taxpayers too, and hence themselves bear at least some of the costs of the crisis.

Why are we so good at creating complexity in finance? How do we reconcile the bad decisions that we make when we do things like structure single-tranche CDOs, trade the ABX index, or give mortgages to people who can’t afford them?

Creating complexity

First, though, a bit on why we’re are good at complexity in finance, and how we’re likely to keep getting even better at it. We’re becoming smarter, and in a particular way. From Wired’s science blog, Frontal Cortex (emphasis ours):

The Flynn effect has always been tinged with mystery. First popularized by the political scientist James Flynn, the effect refers to thewidespread increase in IQ scores over time. … What’s most peculiar is how scores have increased:

1) Scores have increased the most on the problem-solving portion of intelligence tests.

2) Verbal intelligence has remained relatively flat, while non-verbal scores continue to rise.

3) Performance gains have occurred across all age groups.

4) The rise in scores exists primarily on those tests with content that does not appear to be easily learned.

What’s puzzling about this increase in general intelligence is that it appears where we’d least expect it. While one might assume that IQ scores could increase over time in terms of crystallized intelligence — the part of the test that measures particular kinds of knowledge, such as being able to count or vocabulary words — it’s actually increased on measures of fluid intelligence, which is the ability to solve abstract problems.

Which is to say that as generations pass, we have become smarter, but a particular type of smarter. The kind of smart where your 5-year-old can fix your Blackberry while you are busy drawing parallels between the EFSF and a CDO.

We’ve become better at abstract thinking. We don’t have any trouble analysing a financial market that has no physical location, or considering credit exposures to sovereign nations through derivatives contracts. It’s just what we do.

Furthermore, as the ability to think abstractly correlates with intelligence, it becomes a self-reinforcing cycle where the people who are best at such reasoning stay longer in education, and get even better at abstract thinking, becoming even more intelligent… until one day, after many years of study, a good portion of them land in investment banks. So what do you think happens next? To what task is the abstract thinking capability employed?

Is it any wonder, then, that modern finance has become progressively more complex?

But at the same time, wouldn’t these exceptionally intelligent people be able to see the potential instability they are creating, and the increasingly large potential loss to society as a whole through bailouts, and the bypassing of the real economy?

Making bad decisions at arm’s length

It raises a moral question. One that we will discuss by introducing the trolley problem. This is the FT Alphaville version of the thought experiment created by Philippa Foot in 1967.

Out for a walk one Christmas eve, you climb a footbridge to get over some railway lines. Just as you get to the top of the bridge, you notice that an out-of-control trolley is hurtling towards five men working on the tracks farther down from where you are. Too far away to shout to warn them, you look on in horror, certain it’s going to kill them all. Then you realise that there’s a lever next to you. If you pull it, the trolley will divert to a separate set of tracks where there is only one man working. If you pull the lever, the Trolley will kill the one man, but the five will be saved. Do you pull the lever?

Got the answer in your mind? What about in this situation:

Again, you are on the footbridge, same runaway trolley. But no lever. However, there is a very large gentleman standing next to you. You realise (with certainty) that if you push the man onto the tracks as the trolley is passing, it will stop the trolley and the five men will be saved, but the man you have pushed will die. Do you push the man onto the tracks?

Most people pull the lever, but most will not push the man. The situations, of course, are actuarially identical.

Why the difference?

Well, for one, we are hard-wired not to kill our fellow human beings. At least not those who are posing no threat to us whatsoever.

However, introduce some mechanics in between us and murder, and all of a sudden our frame of mind changes. People who would never be able to kill with their bare hands are willing to drop bombs on civilians and pull levers leading to the death of a bystander. As soon as there is some distance between ourselves and the person we are harming (even when that person is ourselves), our evolutionary tendencies to not kill take a backseat.

In case you are still thinking in survivalist terms, i.e. that in war we defend ourselves even if it means attacking civilians to do so, consider this next example.

Nearly everyone would rush to the aid of a drowning child, but not all of us send money to countries where children are starving to death.

Distance from the consequence of our inaction, or insertion of a tool into the action that we take, allows us to make decisions in ways that are logically, and morally, inconsistent.

A mind for finance

And so it is that we get more intelligent and even better at the abstract thinking that allows us to introduce more complexity into the financial game that many of us play. Those who don’t work in finance look on and wonder why we get up to the things that we do, but for the most part they don’t mind as long as it doesn’t affect them.

But lately, it has affected many of them. Too many. In many quarters, from the Occupy movements to new regulations, finance is being held to account. But those in markets will no doubt out-smart such efforts yet again…

… after all, it’s not like they have to push the fat man off the bridge.

This post was inspired by a few WNYC’s Radio Lab podcasts, which have discussed the above concepts, albeit without the finance angle.

Related links:Chimp Fights and Trolley Rides – WNYC’s Radio Lab (Podcast)
Killing Babies, Saving the World - WNYC’s Radio Lab (Podcast)
Are Smart People Getting Smarter – Wired’s Science Blog, Frontal Cortex
Phillipa Foot and the Trolley Problem - Brainiac on the Boston Globe

This entry was posted by Lisa Pollack on Friday, December 23rd, 2011 at 16:00 and is filed under Capital markets, People. Tagged with CDO, EFSF, global financial crisis.

Opacity and Clarity...."Why are so good at creating complexity in finance?"

2011-12-28T08:46:00.000+01:00

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Why is finance so complex?

Lisa Pollack at FT Alphaville mulls a question: “Why are we so good at creating complexity in finance?” The answer she comes up with is the “Flynn Effect“, basically the idea that there is an uptrend in human intelligence. Finance, in this view, gets more complex over time because financiers get smart enough to make it so.
That’s an interesting conjecture. But I don’t think it’s right at all.
Finance has always been complex. More precisely it has always been opaque, and complexity is a means of rationalizing opacity in societies that pretend to transparency. Opacity is absolutely essential to modern finance. It is a feature not a bug until we radically change the way we mobilize economic risk-bearing. The core purpose of status quo finance is to coax people into accepting risks that they would not, if fully informed, consent to bear.
Financial systems help us overcome a collective action problem. In a world of investment projects whose costs and risks are perfectly transparent, most individuals would be frightened. Real enterprise is very risky. Further, the probability of success of any one project depends upon the degree to which other projects are simultaneously underway. A budding industrialist in an agrarian society who tries to build a car factory will fail. Her peers will be unable to supply the inputs required to make the thing work. If by some miracle she gets the factory up and running, her customer-base of low capital, low productivity farm workers will be unable to afford the end product. Successful real investment does not occur via isolated projects, but in waves, forward thrusts by cohorts of optimists, most of whom crash and burn, some of whom do great things for the world and make their investors wealthy. But the winners depend upon the existence of the losers: In a world where there was no Qwest overbuilding fiber, there would have been no Amazon losing a nickel on every sale and making it up on volume. Even in the context of an astonishing tech boom, Amazon was a pretty iffy investment in 1997. It would have been an absurd investment without the growth and momentum generated by thousands of peers, some of whom fared well but most of whom did not.
One purpose of a financial system is to ensure that we are, in general, in a high-investment dynamic rather than a low-investment stasis. In the context of an investment boom, individuals can be persuaded to take direct stakes in transparently risky projects. But absent such a boom, risk-averse individuals will rationally abstain. Each project in isolation will be deemed risky and unlikely to succeed. Savers will prefer low risk projects with modest but certain returns, like storing goods and commodities. Even taking stakes in a diversified basket of risky projects will be unattractive, unless an investor believes that many other investors will simultaneously do the same.
We might describe this as a game with two Nash Equilibria (“ROW” means “rest of world”):

If only everyone would invest, there’s a pretty good chance that we’d all be better off, on average our investments would succeed. But if an individual invests while the rest of the world does not, the expected outcome is a loss. (Colored values wearing tilde hats represent stochastic payoffs whose expected value is the number shown.) There are two equilibria, a good one in the upper left corner where everyone invests and, on average, succeeds, and a bad one in the bottom right where everybody hoards and stays poor. If everyone is pessimistic, we can get stuck in the bad equilibrium. Animal spirits are game theory.
This is a core problem that finance in general and banks in particular have evolved to solve. A banking system is a superposition of fraud and genius that interposes itself between investors and entrepreneurs. It offers an alternative to risky direct investment and low return hoarding. Banks guarantee all investors a return better than hoarding, and they offer this return unconditionally, with certainty, without regard to whether other investors buy in or not. They create a new payoff matrix that looks like this:

Under this new set of payoffs, there is only one equillibrium, the good one on the upper left. Basically, the bankers promise everyone a return of 2 if they invest, so everyone invests in the banks. Since everyone has invested, the bankers can invest in real projects at sufficient scale to generate the good expected payoff of 3. The bankers keep 1 for themselves, pay their investors the promised 2, and everyone is made better off than if the bad equilibrium had obtained. Bankers make the world a more prosperous place precisely by making promises they may be unable to keep. (They’ll be unable to honor their guarantee if they fail to raise investment in sufficient scale, or if, despite sufficient scale, projects perform more poorly than expected.)
Suppose we start out in the bad equillibrium. It’s easy to overpromise, but harder to make your promises believed. Investors know that bankers don’t have a magic wealth machine, that resources put in bankers’ care are ultimately invested in the same menu of projects that each of them individually would reject. Those risk-less returns cannot, in fact, be riskless, and that’s no secret. So why is this little white fraud sometimes effective? Why do investors’ believe empty promises, and invest through banks what they would have hoarded in a world without?
Like so many good con-men, bankers make themselves believed by persuading each and every investor individually that, although someone might lose if stuff happens, it will be someone else. You’re in on the con. If something goes wrong, each and every investor is assured, there will be a bagholder, but it won’t be you. Bankers assure us of this in a bunch of different ways. First and foremost, they offer an ironclad, moneyback guarantee. You can have your money back any time you want, on demand. At the first hint of a problem, you’ll be able to get out. They tell that to everyone, without blushing at all. Second, they point to all the other people standing in front of you to take the hit if anything goes wrong. It will be the bank shareholders, or it will be the government, or bondholders, the “bank holding company”, the “stabilization fund”, whatever. There are so many deep pockets guaranteeing our bank! There will always be someone out there to take the loss. We’re not sure exactly who, but it will not be you! They tell this to everyone as well. Without blushing.
If the trail of tears were truly clear, if it were as obvious as it is in textbooks who takes what losses, banking systems would simply fail in their core task of attracting risk-averse investment to deploy in risky projects. Almost everyone who invests in a major bank believes themselves to be investing in a safe enterprise. Even the shareholders who are formally first-in-line for a loss view themselves as considerably protected. The government would never let it happen, right? Banks innovate and interconnect, swap and reinsure, guarantee and hedge, precisely so that it is not clear where losses will fall, so that each and every stakeholder of each and every entity can hold an image in their minds of some guarantor or affiliate or patsy who will take a hit before they do.
Opacity and interconnectedness among major banks is nothing new. Banks and sovereigns have always mixed it up. When there has not been public deposit insurance there have been private deposit insurers as solid and reliable as our own recent “monolines”. “Shadow banks” are nothing new under the sun, just another way of rearranging the entities and guarantees so that almost nobody believes themselves to be on the hook.
This is the business of banking. Opacity is not something that can be reformed away, because it is essential to banks’ economic function of mobilizing the risk-bearing capacity of people who, if fully informed, wouldn’t bear the risk. Societies that lack opaque, faintly fraudulent, financial systems fail to develop and prosper. Insufficient economic risks are taken to sustain growth and development. You can have opacity and an industrial economy, or you can have transparency and herd goats.
A lamentable side effect of opacity, of course, is that it enables a great deal of theft by those placed at the center of the shell game. But surely that is a small price to pay for civilization itself. No?
Nick Rowe memorably described finance as magic. The analogy I would choose is finance as placebo. Financial systems are sugar pills by which we collectively embolden ourselves to bear economic risk. As with any good placebo, we must never understand that it is just a bit of sugar. We must believe the concoction we are taking to be the product of brilliant science, the details of which we could never understand. The financial placebo peddlers make it so.

Some notes: I do think there are alternatives to goat-herding and kleptocratically opaque semi-fraudulent banking. But adopting those would require not “reform” but a wholesale reimagining of status quofinance.
Sovereign finance should be viewed simply as a form of banking. Sovereigns raise funds for unspecified purposes and promise risk-free returns they may be unable to provide in real terms. When things go wrong, bondholders think taxpayers should be on the hook, and taxpayers think bondholders should pay. As usual, everyone has a patsy, someone else was supposed to take the hit. Ex ante everyone was assured they have nothing to fear.
I have presented an overly flattering case for the status quo here. The (real!) benefits to opacity that I’ve described must be weighed against the profound, even apocalyptic social costs that obtain when the placebo fails, especially given the likelihood that placebo peddlars will continue their con long after good opportunities for investment at scale have been exhausted. By hiding real economic risks from those who ultimately bear them, status quo financial systems blunt incentives for high-quality capital allocation. We get capital allocation in bulk, but of low quality.

DealBook: The Worst C.E.O.’s of 2011

2011-12-27T21:37:00.004+01:00

http://dealbook.nytimes.com/2011/12/27/the-worst-c-e-o-s-of-2011/

ITALY: Free and paid by the state: the hard life of former RED BRIGADE Terrorist

2011-12-24T14:20:00.001+01:00

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Free and paid by the state: the hard life of former br

Jannelli Maurice, convicted Via Fani, collaborates with Raitre. Silvia Baraldini has done consulting for the addition of Veltroni. The coop also receives funding from Mario Moretti from the Lombardy Region

by Stephen Zurlo - November 4, 2006, 00:00

Review

Gian Marco Chiocci Stephen Zurlo

They came in twos and threes, and are now almost all out. With some restrictions, or now completely free. The former terrorists have returned dell'ultrasinistra in society. "It went well," summed up Maurice Bignami, former commander of the first line. Some work in cooperatives, which offer a chance of reintegration of ex-prisoners, others have taken different paths. Some even came in institutions, throwing away the past as a bulky backpack, and is paid by the State fought in his youth. Recently, Leonardo Conti, the son of the former mayor of Florence Lando Conti, who was killed by the Red Brigades February 10, 1986, the Region of Tuscany has placed two very uncomfortable questions: How many families of the victims of terrorism work for the Region or the Province or related entities in Florence and Tuscany? And how many former terrorists? Pending is the Journal groped in a census. Conrad "Frederick" Founder Students Br, 58, arrested in 1978 after being passed in the joint training fighters. In 1980 he tried to escape from San Vittore with Vallanzasca, in 2003 wrote a book with other authors ("The bank robbery, history, theory, practice"), is out of jail for years, working in a co-op information. Vittorio " Alvaro "Antonini already responsible for the Roman column Br, involving seizure Dozier, who was arrested in 1985, is under surveillance since 2000. Each day in and out of prison to work outside. Chaired by the cultural association Rebibbia Papillon-promoter of the protest in 2004 was extended to all prisons in Italy. He had the honor of being summoned to the Deputies Committee-Justice to discuss the problems of the galleys. Denied that he was searched in jail after the murder D'Antona. Lauro Azzolini Executive Member of the Red Brigades in the process Moro, 62, three life sentences, the man who shot Montanelli, is free. From semi-free began to work in a coop that deals with non-profit sector, disabled people, for the Company of Works. Balzerani Barbara Several life sentences at the top of the first Red Brigades-PCC, author of the book "Comrade Moon" for Feltrinelli, has worked with the coop Blow Up Trastevere specialized in computer music. Arrested in 1985 obtained the first permit in the early nineties. Silvia Baraldini convicted by the U.S. to 43 years in prison for subversive association, was released for health reasons getting, December 27, 2002, a collaboration with the junta Veltroni. To advocate the renewal of the contract to provide advice on women's work, in 2003, was the councilor of the PRC Communist Luigi Nieri. The association of the victims complained in the prosecution. murderess Marco Barbone The journalist Walter Tobagi has repented and returned free. He works in a print shop in Milan. Cecco Bellosi Former member of the column, Walter Alasia, in handcuffs in 1980, sentenced to 12 years, free in 1989. Chaired by a rehabilitation center for addicts to Nessus working with the association Lila. Vittorio Bolognese-Colonel of the Red Brigades guerrilla party, is under surveillance since September 2000. He worked as a computer operator to co-op where he found Roman Parsec Pancella, Piccinino and other ex-irreducible. Bonisoli Franco Commando Brigade in Via Fani, lifer, 13 years in prison, dissociated, is free. He made the chart in a coop in Sesto San Giovanni, a company working in environmental services. Besuschio Paola His name was made by the Red Brigades during the Moro kidnapping, was detained, he wanted in exchange for the release of the leading AD. Work in a cooperative statistics.Braghetti former companion of Anna Laura Prospero Gallinari, is involved in the murder of Judge Vittorio Bachelet, is the jailer of Aldo Moro in Via Montalcini, known as "Ms. Altobelli 'sentenced to life imprisonment. He has written several books, worked every day since 1994 the organization of volunteer close to DS, "Air Time" who is interested in the problems of prisoners. In 2002 he obtained his parole. Paul Deposit exponent among the hardest of the armed party, burst behind convictions, is semi-free for quite a while. He works steadily at the coop December 32, connected to the District Multipurpose Centre around which gravitate old acquaintances of the years of lead, such as saws and Cecilia Bruno Massara. Geraldina Colotti Militant of UCC, a former philosophy teacher, wounded in a firefight in January 1987, Roman worked at Coop 32 December, is now used to the daily newspaper Il Manifesto, where he also works the former Bierre Francesco Piccioni, parole since 1999. Bierre Anna Cotton Former Party of the ferocious guerrilla, who was involved in the kidnapping of former Councillor Cyril Cyrus dc , who was arrested in 1982, under surveillance for years, has worked since 2002 in the Political Secretariat of the Communist Refoundation dell'europarlamentare, Morgantini. founder and ideologue of Renato Curcio Br, toured Italy lecturing in schools, universities, city councils, presents his books at festivals of the parties. On TV, on Berlusconi's Canale 5, arrived to say that the victims are 70 years of his comrades dead on the field. For ten years, is head of editorial coop "Sensitive to the leaves," which deals with studies on the armed struggle, prison and drug ridden by Don Gallo latter issue, the rival of Genoa parish priest, who presented the book edited by Curcio with Dario For. Sentenced to 30 years, he served 24, is semi-free since 1993. Alessandra De Luca Moro She Brigade in the process, is under surveillance for some time. She was nominated by the regional party Bertinotti of Lazio, but could not make it. Roberto Del Bello Former RB Venetian column, sentenced to 4 years and 7 months for armed gang, now works as a secretary at the Interior Ministry of Francesco Bonato , Secretary of the Interior for the Communist Refounding. Sergio D'Elia, Director of Frontline, he spent 12 years in prison. Released and obtained the rehabilitation, he joined the Radical Party. In 2006 he was elected to the House in the list of Rose in the Fist of the classroom and became secretary of Deputies. Among controversy and protests. Adriana Faranda is part of the strategic direction of the Red Brigades, soon joined the "dissociation" gaining freedom. Is released in 1990 and entrusted the work of Don Calabria, where he worked on the computer. He wrote books, did the photographer. Show ends with Constantius, and endless controversy. Fornasieri Diego, along with other former inmates is active in the non-profit organization through social cooperative of organic products "Arete". First line of guerrilla, receives a sentence of 30 years in 1983. Free.Alberto Franceschini. With Curcio Founder of the Red Brigades in 1983 dissociates. Today she works in Rome with the association for prisoners Braghetti "Air Time". Sentenced to more than 50 years in prison, was released from prison in 1992 after 17 years in prison.He writes books, participates in conferences. Prospero Gallinari member of the commando who shot the cover of Moro in Via Fani, head of the "people's prison" is free for many years for heart problems. Claudia Joy Pimpernel of Communist Combatants Unit underwent a sentence to 28 years in prison for the murder of General Giorgieri and wounding economist from Empoli. It is on parole since January 2005. Ends in 1991 intercepted while talking in the cell with a br Meloria attempt recovery of UCC. Ghignoni RB Eugene Pius condemned the process involved and More, is in charge of General Affairs Department of the University Roma Tre, care safety .. . Jannelli Maurizio Roman Capocolonna Already the Red Brigades, a life sentence for various crimes (including the massacre in via Fani) worked as a writer at RAI since 1999. For the TG3 followed "The business of living", "Italian Diary," "Residence Bastogi," is on the staff of the sports media "Challenges." He wrote "Princesa" book about a suicidal transsexual. Since 2003 is conditional. Ligas Natalia Name of battle "Angela", the hard-Party of the Red Brigades guerrilla who participated in the massacre of Piazza Nicosia in Rome, convicts, permits award since 1998, is semi-free since 2000, despite not has never deviated. Giorgieri Mauritius Locust Participate in crime (24 years worth), is extradited from France in March 1988, after a few years and is taken out of the Lelio Basso Foundation-Issoco as "assistant reference room." Francis Maietta Former militant of the UCC, heavy sentences, works part time in an important institution since 1990. He married in 1998 in Ostia with a girl of Caritas. Among the guests, the former president Francesco Cossiga. Marcetta Ex Corrado first line, is now director of the Foundation Michelucci in Fiesole. Nadia Mantovani Diff, sentenced to 20 years for belonging to Br, gets probation in January '93 when it suffers two thirds the sentence.Former girlfriend of Renato Curcio, is one of the founders of the association for the rehabilitation of offenders' Towards Home. " On 23 August 2004, the year on its performance lead Rimini to the meeting was very successful among the public of Cl. Mario Moretti The number one Br, leading the strategic direction, participates in the Moro kidnapping, after 17 years in prison, 9 clandestine and 6 life sentences in 1994 he obtained permission to go to scale. Once outside, exterior work, promoted volunteerism.Computer scientist involved in the founding of the Cooperative made up of former Spes irreducible differentiated. The co-op get the various contributions, including from the Lombardy Region, together with the association "variable geometry" seeks "non-alienating forms of work for prisoners." He writes books. Morucci Valerio. The former postman 55 days of the Red Brigades during the Moro case, discounted 17 years in prison, dissociated, is free. Author of best-selling books (the latest, "The worst of Youth") winners of literary awards with "The Collector" (the sixth edition of "Experiences in yellow") works as a computer consultant. Roberto Ognibene. Enjoys the benefits due to the law on differentiated and works as a clerk to the City of Bologna. Hail Mary Petricola This year the Province of Rome took over this former repentant Brigade, Moor recurring name in the process, as head of the center of Torre Angela, VII Hall Capital, which finds jobs for the unemployed. Freed in 1987, in 2004 we find in the list of regional social workers. Pancella Remo Killer militarist wing Red Brigades' Column March 28, "the former employee of the Post Seizure D'Urso, is blocked by the police on June 7 1982. Pluricondannato, is part of a social co-op (which has hosted other former terrorists red). Sardinian Marco Pinna Soldier column of Br, is vice president of environmental coop "Ecotopia." Susanna Ronconi historical figure of the Tuscan section of the Front Line, the Group works Abel in Turin where he is responsible for the so-called 'Unit of the road. " In 1987 he earned allowed the first-prize for its dissociation. It has been a consultant to local health authorities and municipalities of northern Italy, collaborated in the publication of "Report on the global rights" by the Association for Information & Society National CGIL. A query of Gasparri (An) and Giovanardi (CCD) as the beneficiary of a consultation report by the then Turkish Minister Livia. Senzani The John "criminologists" of Br-party guerrilla, irreducible to the core, already suspected of being The Grand Old Man of the Moro kidnapping, life imprisonment for the murder of his brother repented of Patrick Peel, released in 1999 but a year after probation is behind the desk of a documentation center of Tuscany called the 'culture of democratic legality "and inserted in Informacarcere project. In 2001 it was discovered that the center could clone all acts, even those secrets, the parliamentary committee on the massacres. It is the coordinator of the publishing house Editions Battle of the left. Marco Suleiman Ex First line, is now director of the DS to the Municipality of Livorno. For about ten years is a volunteer assistant to the prison in charge of Livorno Arch. Nicholas Suleiman. Former First-line, sentenced to 22 years in Michelucci Foundation works in Fiesole, founded in 1982 by the Tuscany Region and the municipalities of Pistoia and Fiesole. The Region of Tuscany has been a consultant for the new law to protect the Roma and Sinti people and among the coordinators of an international campus as part of the Regional Port, on behalf of the Department of Culture of the Region.

ITALY: HOW TERRORISTS WITH 3 OR 4 LIFE SENTENCES ARE FREE WITH A WELL PAID JOB. ...BY THE COMMUNITY..

2011-12-24T14:09:00.000+01:00

ITALIAN TERRORISM ********* HOW YOU RECYCLE THE TERRORIST**
ROBERTO ADAMOLI , Exponent AB now works in the community of Don Mazzi Corrado "Frederick" Alumni. Br Founder, 58 years, will leave to give birth to joint training fighters, was arrested later in 1978. In 1980 he tried to escape from San Vittore with Vallanzasca, in 2003 wrote a book with other authors (" The bank robbery, history, theory, practice "), is out of jail for years and works in a co-op information. Vittorio "Alvaro" Antonini. Already in charge of Roman column Br, involving seizure Dozier, who was arrested in 1985, is under surveillance since 2000. Each day in and out of prison to work outside. Chaired by the cultural association Rebibbia Papillon-promoter of the protest in 2004 was extended to all prisons has had the honor of being summoned to the Deputies Committee-Justice to discuss the problems of the galleys. denied that he had been searched in the cell after D'Antona murder. Victor Assier . Head of 'Walter Alasia "in Milan, working on the "creative workshop" Caritas . Lauro Azzolini. Member of the Executive of the Red Brigades in the process Moro, 62, three life sentences, the man who shot Montanelli, is free. semifree Since he started working in a co-op that deals with non-profit sector, disabled people, for the Companionship of Works. Barbara Balzerani. Several life sentences at the top of the first Red Brigades-PCC, author of the book " Comrade Moon "for Feltrinelli, the coop has worked with Blow Up Trastevere specializing in computer music. Arrested in 1985 obtained the first permit in the early nineties. It is now free on probation for 5 years, although he had gained 4 life sentences and has participated in the most heinous crimes: the basis of Moro Moro, to January Dozier. Silvia Baraldini. Condemned by American courts to 43 years in prison for subversive association, was released for health reasons getting, December 27, 2002, a collaboration with the junta Veltroni. To advocate the renewal of the contract to provide advice on women's work, in 2003, was the councilor of the PRC Communist Luigi Nieri. The association of the victims complained in the prosecution, but I'm afraid that does not have much hope of being accepted. Marco Barbone. murderess of the journalist Walter Tobagi has repented and returned free. He works in a print shop in Milan. Cecco Bellosi. Former member of the column, Walter Alasia, in handcuffs in 1980, sentenced to 12 years, free in 1989. Chaired a center for recovering addicts to Nessus and is collaborating with Lila. Paola Besuschio. His name was made by the Red Brigades during the Moro kidnapping, was detained, he wanted in exchange for the release of the AD leaders, working in a cooperative statistics. Maurice Bignami, former commander of the Front Line was arrested in Turin in '81, as he tried to assault goldsmith: wields a machine gun, but had no time to use it. Two life sentences and a long string of crimes behind him: the agent Joseph Lo Russo, the student Iurilli Emanuel, Fiat Charles Ghigleno the manager, the bartender Civitate Carmine ... In dal1992 probation he has been with Caritas of Rome, together with his wife Maria Teresa Conti, who was also ex-militant "Frontline." Vittorio Bolognese. Colonel of the Red Brigades guerrilla-Party, is under surveillance since September 2000. He worked as a computer operator at the Roman Parsec coop where he found Pancella, Piccinino and other ex-irreducible. Ovid Bompressi, sentenced to 22 years in prison for the murder of Calabresi, pardoned by the President of the Republic at the request of the people left, but also two "moderate" as UDEUR Clemente Mastella and Rutelli of the Margherita, can already enjoy The ultimate freedom. Franco Bonisoli. Commando Brigade of the Via Fani, lifer, 13 years in prison, dissociated, is free. He made the chart in a coop in Sesto San Giovanni, a company working in environmental services. Anna Laura Braghetti. Former partner of Prospero Gallinari, is involved in the murder of Judge Vittorio Bachelet, is the jailer of Aldo Moro in Via Montalcini, known as "Ms. Altobelli 'sentenced to life imprisonment. He has written several books, worked every day since 1994 the organization of volunteer close to DS, " Air Time "who is interested in the problems of prisoners. In 2002 he obtained his parole. Now in 2007 he obtained a position as State and works for Italy Jobs NEW ENTRY - Carla Maria Brioschi. Former Red Brigades, was sentenced to life imprisonment for taking part in the kidnapping and murder of Aldo Moro, president of the DC. But his work within the terrorism of the Communist was not only on the Moro case, the former terrorist was among the founders of "Walter Alasia column" in the years of "Lead" organized and carried out an endless series of actions terrorist, often merged in the crime. (According to some, however, she was part of the fringe of terrorists called "dissidents", led by Valerio Morucci that part of the Moro kidnapping opposed the decision to execute the policy of the DC, thus going against the decision of the head of the column Mario Moretti.) yesterday 10/11/08 after 26 years in prison she was awarded the "parole" for 5 years, which limits the output of the house by 23 pm to 7 am, everything else will work with social services and various cooperatives, which are now if you are not terrorists and did not kill someone, you with us into hell. Robert Carcano. A member of the Communist fighters training. works at the "New Community" Don Gino Riboldi Paul Box. Exponent among the hardest of the armed party, burst behind convictions, is semi-free for quite a while. He works steadily at the coop December 32, connected to the District Multipurpose Centre around which gravitate old acquaintances of the years of lead, such as Bruno Saws and Cecilia Massara. Geraldine Colotti. Militant of the UCC, a former philosophy teacher, injured in a shootout in January 1987, is on parole and worked from 1999 to December 32 Roman coop, now a clerk at the newspaper Il Manifesto. Maria Teresa Conti . Former militant "Frontline," is part of the "proletarian armed squads." Among his feats, the kidnapping and wounding midwife Nigra Sunday, shot in the legs with a trumped-up charges. Like her husband Maurice Bignami former terrorist, worked at Caritas of Rome . Anna Cotton. Bierre Former Party of the ferocious guerrilla, who was involved in the kidnapping of former Councillor AD Cyrus Cyril, who was arrested in 1982, under surveillance for years, has worked since 2002 in the Political Secretariat of the Communist Refoundation dell'europarlamentare, Morgantini. Renato Curcio. founder and ideologue of the Red Brigades, Italy turns lecturing in schools, universities, city councils, presents his books at festivals of the parties. On TV, on Berlusconi's Canale 5, arrived to say that the victims are 70 years of his comrades dead on the field. For ten years, is head of editorial coop "Sensitive to the leaves," which deals with studies on the armed struggle, prison and drug ridden by Don Gallo latter issue, the rival of Genoa parish priest, who presented the book edited by Curcio with Dario For. Sentenced to 30 years, he served 24, is semi-free since 1993. Roberto Del Bello. Former RB Venetian column, sentenced to 4 years and 7 months for armed gang, now works as a secretary at the Interior Ministry of Francesco Bonato, Undersecretary of the Interior for the Communist Refounding. Sergio D'Elia. Director of Frontline, he spent 12 years in prison. Released and obtained the rehabilitation, he joined the Radical Party.In 2006 he was elected to the House in the list of Rose in the Fist of the classroom and became secretary of Deputies. Among controversy and protests, of course unheard. Alessandra De Luca. She Moro Brigade in the process, is under surveillance for some time. She was nominated by the regional party Bertinotti of Lazio, but could not make it. Adriana Faranda. It is part of the strategic direction of the Red Brigades, soon joined the "dissociation" gaining freedom. It is issued in 1990 and entrusted the work of Don Calabria, where he worked on the computer. He wrote books, did the photographer. Ends at Costanzo Show, and endless controversy. Enzo Fontana. Activist in the GAP, now a successful writer and scholar of Dante Alighieri, has worked on "Creative Workshop" Caritas. Fornasieri Diego. Along with other former inmates is active in the non-profit organizations through social cooperative of organic products "Arete." guerrilla front-line receives a sentence of 30 years in 1983, after 3 years on the run, is now free. Alberto Franceschini . Curcio Founder with the Red Brigades in 1983 dissociates. Today she works in Rome with the association for prisoners Braghetti "Air Time". Sentenced to more than 50 years in prison, was released from prison after only 17 years in prison. He writes books, participates in conferences. Prospero Gallinari. Member of the commandos who shot the cover of Moro in Via Fani, head of the "people's prison" is free for many years for heart problems. Claudia Joy. Pimpernel of Communist Combatants Unit undergoes a sentence to 28 years in prison for the murder of General Giorgieri and wounding economist Da Empoli, tried for the murder of Aldo Moro. It is on parole since January 2005. In 1991 ends intercepted while talking in the cell with a br Meloria attempt recovery of the UCC. He works as a consultant to the "Macro", a prestigious contemporary art museum of the Capitol. Eugenio Pio Ghignoni. Brigades involved in the process and sentenced Moro, is in charge of General Affairs Department of the University Roma Tre, by security ... Maurizio Jannelli. Capocolonna Already the Roman Br, life imprisonment for various crimes (including the massacre in via Fani) has worked as a writer at RAI since 1999. For the TG3 followed "The business of living", "Italian Diary," "Residence Bastogi," is on the staff of the sports media "Challenges." He wrote 'Princesa' book about a suicidal transsexual. Since 2003 is conditional. Paolo Klun. exponent First line , founded in Bologna, the street paper "Piazza Grande", which gives voice to the marginalized and the homeless. Natalia Ligas. Name of battle "Angela", the last of the Red Brigades guerrilla-party who participated in the massacre of Piazza Nicosia in Rome, convicts, permits award since 1998, is semi-free since 2000 although there has never deviated. Maurizio Locust. Giorgieri Participate in crime (24 years worth), is extradited from France in March 1988, after a few years and is taken out of the Lelio Basso Foundation-Issoco as "assistant reference room." Francis Maietta. Former militant of the UCC, heavy sentences, works part time in an important institution since 1990. He married in 1998 in Ostia with a girl of Caritas. Among the guests, the former president Francesco Cossiga. Nadia Mantovani. Diff, sentenced to 20 years for belonging to Br, gets probation in January '93 when served two thirds of the sentence. Former girlfriend of Renato Curcio, is one of the founders of the association for the rehabilitation of offenders' Towards Home . " On 23 August 2004, the year on its performance lead Rimini to the meeting was very successful among the public of Cl. Conrad Marcetta. Former first-line, is now director of the Foundation Michelucci in Fiesole. Cecilia Massara. Former member of the BR-PCC (arrested in late 1984 after a shootout with security guards of an armored truck, conflicts in which another militant was killed in the BR-PCC, Anthony Gustin, and the same was Massara injury), in 1994 he obtained the temporary suspension of the sentence, being pregnant, in March '96, the imminence of the end of the suspended sentence, the farmer's wife stays in touch with the Rome police to arrange their return to prison. He works steadily at the coop December 32, connected to the District Multipurpose Centre. Fabio Matteini, Red Brigades (linked to Nadia Desdemona Lioce and Luigi Fuccini, Nuclei communist fighters NCC) charged with an armed group and association with a terrorist intent, known by the nom de guerre "Comrade Antonio" which would have the task of recruiting new levers to start the armed struggle, but it was enough for him 20 days in jail because a judge decided that there was sufficient evidence to keep him behind bars, the important thing is that it was obliged to remain in Italy ... you never Hand escapes this precious work of the majority? Now let us see to what task will be allocated. JOSEPH MEME exponent of "working Autonomy", condemned for the murder of the policeman Custrà Antoninus, now works in "Poiesis" the center for the treatment of AIDS. Mario Moretti. The number one of the Red Brigades, leading the strategic direction, participates in the Moro kidnapping, after 17 years in prison, a clandestine 9 and 6 life sentences in 1994 he obtained permission to go to scale. Once outside, external work, promoted volunteerism. Computer scientist involved in the founding of the Cooperative made up of former Spes irreducible differentiated. The co-op get the various contributions, including from the Lombardy Region, together with the association "variable geometry" seeks "non-alienating forms of work for prisoners." He writes books. Valerio Morucci. The former postman of the Red Brigades during the 55 days of the Moro case, discounted 17 years in prison, dissociated, is free. Author of best-selling books (the latest, "The worst of Youth") winners of literary awards with "The Collector" (the sixth edition of "Experiences in yellow") the ivories as a computer consultant. Roberto Ognibene. It enjoys the benefits due to dissociated law and works as a clerk to the City of Bologna . Remo Pancella. militarist wing of the Br Killer 'March 28 column, "the former employee of the Post Seizure D'Urso, is blocked by the police on June 7, 1982. Pluricondannato, is part of a social co-op (which has hosted other former terrorists red). Ave Maria Petricola. This year the Province of Rome took over this former repentant Brigade, Moor recurring name in the process, as head of the center of Torre Angela Hall Capital VII, which finds jobs for the unemployed. Freed in 1987, 2004 is found in the list of regional social workers. Christopher Piancone. Former Red Brigades, sentenced to life imprisonment for complicity in the murder of Rosario Berardi, already under surveillance since 2004 has been arrested on October 1, 2007 for the robbery of the bank Monte dei Paschi di Siena. This is also a End of the many discounts that unfortunately it is anticipated by diehard, who can also enjoy seeds or total freedom. Raffaele Piccinino. Former irreducible of NAP (ARMED PROLETARIANS CORES), who also attack at District Walnut where he died of a police escort, sentenced to life imprisonment and 22 years in prison) has worked as a computer operator at the coop Roman Parsec. Francesco Piccioni . ex-BR is used to daily Il Manifesto . Marco Pinna. Sardinian Soldier column of Br, is vice president of environmental coop " Ecotopia . " Susanna Ronconi. tuscan historical figure of the section of the Front Line, Abel works in Turin, where the Group has the responsibility of so-called " road unit ". In 1987 he earned allowed the first-prize for its dissociation. It has been a consultant to local health authorities and municipalities of northern Italy, collaborated in the publication of " Report on the global rights"by the Association for Information & Society National CGIL. A query of Gasparri (An) and Giovanardi (CCD) as the beneficiary of a consultation report by the then Turkish Minister Livia. NEW ENTRY - Roberto Sandalwood. Already active in the struggle continues adheres to the Front Line and is involved in many terrorist acts. Arrested in 1980 admitted his participation in the murders of Charles Ghiglieno , Carmine Civitate and Bartholomew Mana. Dissociatosi then by armed struggle, enabled the State to know the names and actions of many members of the terrorist organization, which was dismantled in accordance with her statements. Sentenced to 11 years it suffers a little over 2 and moved to Kenya to escape the death sentence hanging over his head for having betrayed the "comrades in arms." Back in Italy, does not enjoy government protection and is working as an employee of a private company. In 2008 it will be re-arrested for some actions, which are considered terrorist, against Islamic centers in Milan and sentenced is in jail since last April. Bruno saws. It is part of the great mass movements of the '68 / '69 and '77 until the landing of armed struggle. Before the Committee of the Communist Centocelle (Co. Co. Co.), struggles for housing, jobs, the flirting with the Power Workers, the clashes with the fascists landing armed struggle becomes amilitant Roman column of the Red Brigades. It is part of the focus group that seized March 16, 1978 the President of the Christian Democrat Aldo Moro, as well as an active participant in many of the actions of the Red Brigades of the Roman column until his arrest, May 19, 1980 when - in the ranks of the past Neapolitan column - 'Claudio' participates in the attack that kills the councilor Democrat Pino Amato. Sentenced to life imprisonment, was released from prison in April 1995, after only fifteen years in prison, is allowed to work outside and in 1999 the following offenses is withdrawn from treatment and returned to prison. He works steadily at the coop December 32, connected to the District Multipurpose Centre around which gravitate old and still oscenze. Sergio Sergio. military commander of "Frontline" and ideologue of dissociation, now works in the group of Don Luigi Ciotti Abel. Giorgio Semeria. Member of the historic core of the Red Brigades, has long been a volunteer at the San Vittore prison in Milan. John Senzani. The " criminologist "of Br-party guerrilla, irreducible to the core, already suspected of being the Grand Old Man of the Moro kidnapping, life imprisonment for the murder of his brother repented of Patrick Peel, was released in 1999 but a year later in semi-liberty is behind the desk of a documentation center of Tuscany called the ' culture of democratic legality "and included in the draft Tell jail. In 2001 it was discovered that the center could clone all acts, even those secrets, the parliamentary committee on the massacres. It is the coordinator of the publishing house Editions Battle of the left. Adriano Sofri. Former leader of Lotta Continua and sentenced to 22 years for the crime Calabresi, that apart from the fact that he has enjoyed at least twenty years in freedom for the continuous process of which it is impossible to understand the reasons for which he is been given this opportunity, denied to everyone else and now after the final conviction, already in the wild "special" for health reasons, although it remains unclear which, given the ongoing activities in which it engages is active collaboration with the Prodi government, from which is also paid handsomely, while the Italians are hungry. Now at the end of 2008 he returned to speak with the tones he used at the time of the murder Calabresi when already the day after his murder, on "Lotta Continua" wrote "Killed Calabresi, the most responsible for the murder of Pinelli." The trouble is that today in La Repubblica writes that publishes his ravings and his revenge, teaches young people in our universities and how to indoctrinate the young, of course he is just a sample as a fact and the first signs of a return to the 68 already can be seen on our streets, on the occasion of the Gelmini decree falsehoods. Mark Soliman. Former first-line, the DS is now advisor to the city of Livorno. Over the last ten years is a volunteer assistant to the prison in charge of Livorno Arch. Nicholas Suleiman. Former first-line, sentenced to 22 years the ivories at the Fiesole Michelucci Foundation, established in 1982 by the Tuscany Region and the municipalities of Pistoia and Fiesole. The Region of Tuscany has been a consultant for the new law to protect the Roma and Sinti people and among the coordinators of an international campus in the regional initiative Freeport , on behalf of the Department of culture of Tuscany. Ettorina ZACCHEO. A member of the Communist fighters training works at the "New Community" Don Gino Riboldi . NDR this list was originally taken from The Journal OF 4/11/2006 signed by Gian Marco and Stefano Chiocci Zurlo - with an article titled: Free and paid by the state: the hard life of former Red Brigades . They work in groups funded by local authorities, working with deputies. Some are also candidates for the elections and D'Elia is a leader of the House . Another part was taken from the site information centers and then updated as the preparation of Lysistrata was aware of the new "premature releases" On the site "Cossacks in San Pietro" you can read this poignant article: Offres prestigious job, refrain inexperienced terrorist *Adriana Bolchini Gaigher* *ODDII*

SELECTED BLOGS: OUT OF THE CROOKED TIMBER//Cognitive dissonance and detention without trial

2011-12-23T19:37:00.000+01:00

Courtesy of OUT OF THE CROOKED TIMBER
ALL RIGHTS RESERVED TO THE OWNERS

Cognitive dissonance and detention without trial

by JOHN QUIGGIN on DECEMBER 23, 2011

OUT OF THE CROOKED TIMBER

Now that Obama has signalled that he will sign the National Defense Authorization Act, US citizens have no legal rights that can’t be over-ridden by miltary or presidential fiat. Anyone accused of being a terrorist linked to Al Qaeda can be arrested, shipped overseas and held indefinitely without trial, or alternatively tried by military commissions.[1] And, if arrest isn’t feasible or convenient then (at least outside the US), they can be hunted down and assassinated, with or without warning.

On the face of it, that makes the US a scary place to live. But, as a matter of everyday reality, most Americans aren’t scared at all.[2] Should they be?

There is a problem of cognitive dissonance here. The powers claimed by the Bush and Obama Administrations have only been used against US citizens on a handful of occasions and always against people who were, at least, supporters of Islamist terror groups. As far as everyday experience is concerned, the ratification of those powers by Congress makes no difference.

Is this situation stable, or is the US on a slippery slope? If the law remains unchanged, expansion of its scope is virtually inevitable. The Republicans have long demanded the end of ordinary criminal trials for those accused of involvement in Islamist terrorism and, sooner or later, they will be in a position to enforce that demand. As with Guantanamo Bay, that’s a step that will prove virtually impossible to reverse.

As Glenn Greenwald has pointed out, the system as applied so far has a multi-tiered approach to a guaranteed outcome. If the evidence against a suspect is adequate and legally admissible suspects, can be tried and convicted in civilian courts. If it’s dubious but enough to pass muster in a military tribunal they can be tried and convicted there. If there’s no admissible evidence at all, they can can be held without trial. Whichever route is chosen, suspects, once arrested, need never be released.

The next steps would probably involve:

* removing (or reading down to insignificance) the requirement for a link to the 2001 attacks, and using the detention power for broader groups that might be classed as terrorist. It’s easy to imagine the right using this against leftwing protest groups. On the other hand, once the new laws are fully accepted, it’s worth observing that there are quite a few actual terrorists on the political right, and plenty more people who might be accused of giving them material . A particularly alarming possibility, since it would massively expand the potential target group is the application of the law to alleged ‘narcoterrorists’, some of whom are supposedly linked to Hezbollar.

* abandoning any pretense of adhering to rules of evidence, and allowing convictions based on hearsay, entrapment and so on. Existing practice has already gone a fair way in this direction

After that, the road is open to the unfettered use of these powers. Even if the numbers actually detained were relatively modest (in the thousands, say) the threat would be available in all sorts of contexts, going well beyond law enforcement.

The process would presumably move more slowly if the Dems retained power. On the other hand, the longer the laws remain on the books with bipartisan support, the harder it will be to challenge their inevitable use.

Is there any prospect of a reversal of this trend? Based on past experience, this won’t happen simply because of principled objections, so any reaction will only come when these powers are actually abused. And given the abuses to which the US public (and even more the US elite) are already inured, it would take something quite extreme – either mass detention of people who are clearly innocent or the use of the law against members of the elite, leading the rest to take alarm.

Perhaps I’m being overdramatic here. There have, after all, only been a handful of cases where these powers have been asserted, and I don’t detect a lot of enthusiasm for a police state among ordinary Americans. So, anyone who would like to cheer up my festivities is welcome to show me I’m wrong about this.

fn1. I’m aware that the part of the legislation making detention mandatory includes anexemption for US citizens, and that the part relating to Al Qaeda linked terrorism purports merely to endorse the status quo, which is left undefined. But the fact that Congress rejected amendments that would have explicitly excluded US citizens, and that the Bush Administration succeeded in holding US citizens in military custody for years make it quite unlikely that the courts would intervene to free alleged terrorists from military detention claimed as necessary by the President.

fn2. As a now-departed visiting non-citizen the change of rules makes no difference to me – the US has long claimed an absolute right to seize or kill anyone, other than a US citizen, anywhere in the world, and US courts have repeatedly denied redress to those claiming wrongful detention and torture following seizure in the US or elsewhere. That didn’t stop me coming to the US, nor has the loss of any marginal protection I might gain from being in the US deterred me from going home. And, while in the US, I haven’t worried about what I said or who I talked to, despite the absence of any legal protections. So, I have just the same cognitive dissonance as everyone else.

Mahler: Symphony No. 5: Part I: Mov. 2 -

2011-12-23T13:24:00.002+01:00

"We are not the greatest of our Fathers"

2011-12-23T13:08:00.000+01:00

REPORTAGE

taken from the No 11-2011

"We are not the greatest of our Fathers"

At Le Barroux, near Avignon, forty years since Sun founded the Benedictine community Gérard Calvet blooms in the sign of strict observance of the Rule and love the ancient liturgical tradition of the Church

John Ricciardi

From the windows of the monastery of Le Barroux the sky of Provence is a blue flag taut in the wind. The mistralbeats him at times with violence: in some winter days can blow up the nearby mountains two hundred miles per hour. The olive trees and vineyards do not seem to suffer, but the vegetation is mostly low, Mediterranean, it seems, except the cypress trees, artfully placed to remember that these walls you look upwards. Under the sky, like a regular cone, stands the dark mass of Mont Ventoux. This is where the Good Friday of 1336 he made with his brother Gherardo Petrarch his famous "ascent", described in a letter to Dionysius of Borgo San Augustine Sepulchre, which had started reading the Confessions . At the end of the climb, the poet read at random at a step brother of Book X, in which Augustine writes: "They're the men to admire the peaks of the mountains, the great waves of the sea and the vast currents of the rivers, the circle of ' ocean and the orbits of the stars, and do not care about themselves. "
Petrarch, in his continuing struggle between the love of earthly things and the nostalgia of those in heaven, envied Gerard, who was a friar, that detachment, that freedom that enabled him to climb the mountain fast and light, without the weight that held down the poet.

A history of fidelity to Tradition
Right here, forty years ago, August 22, 1970, another Gerard, to be exact Gerard Calvet, French Benedictine, came riding on a motorcycle, with his kit in the luggage rack, the blessing of 'abbot of the monastery from which he came, and settled in the small chapel of Bédoin, dedicated to St. Mary Magdalene. In the turbulent years of the post-conciliar period, only wanted to continue his monastic life without being subject to those "experiments" of doctrinal or liturgical renewal, which seemed much poorer than the rich "ancient and ever new" tradition of prayer, silence, manual labor functions, in Latin, traditional liturgy.
A choice of loneliness, her, it was brief. Three days after his arrival, a young Bédoin came to ask to be received as a novice. Dom Gérard, surprised and unsure what to do, replied that he would know how to accept it, but the insistence of the won. At the end of eight years constituted a community of 11 monks, the chapel, with its little ruined priory, restored promptly, thus became too narrow for the new monastery.But the growth of the foundation, aided by the abbot of Dom Gerard, went on.
The attachment to the traditional liturgy in those years is combined with a natural sympathy for the positions of Archbishop Lefebvre, who in July 1974 proceeded to celebrate the first orders the monks.This provoked the reaction of the abbot who had initially favored the choice of Dom Gerard, but at that time ordered him to close his monastic experience. The community was therefore excluded from the Congregation of the Benedictines of Subiaco.
Faced with this either-or , Sun thorny Gerard chose the path to continue the foundation, saddened by the rift, but believes in his heart that love the old liturgical tradition of the Church could not be at variance with the heart of faith, with loyalty to the Pope, and that God would find a way to solve a canonical situation became irregular. In 1980 he was given a farewell Bédoin and was laid the first stone of the new monastery in the town of Le Barroux, between Mont Ventoux and the "Dentelles" of Montmirail, a Romanesque Revival style building, raw, basic, which was completed in little more than a decade.
Meanwhile, the rift between Lefebvre and the Church deepened, although Dom Gérard continued to hope for a shift. And so, when John Paul II in 1988 with the motu proprio Ecclesia Dei was to meet the demands of the Catholic "traditionalist", giving them, albeit under certain conditions, to celebrate the pre-conciliar rite according to the monastery of Le Barroux was a day of celebration. Dom Gérard his monks had always said that if they had not suffered from the situation of the monastery canonically unresolved, meant that the Church really did not like. And when Monsignor Lefebvre, not trusting the offers of Rome, in the same year proceeded to ordain some bishops without the consent of the Pope, in fact inaugurating the schism, the monastery chose unwavering loyalty to Rome and the break with the movement of Archbishop French. Dom Gérard paid for this attack to the Church rejected the monastic foundation, seeing that in the meantime Le Barroux had started in Brazil, who preferred to remain faithful to the "hard line" of Lefebvre.
The following year, 2 October 1989, Cardinal Gagnon , accompanied by the bishop of Avignon, solemnly consecrated the church of the monastery just ended. With this public act, it could be seen the full experience of Le Barroux unity with the Catholic Church.

The monks sing the office of Lauds at six o'clock in the morning
[© Massimo Quattrucci]

Daily life
in the light of the Provence countryside today, the monastery seems to live a life away from the rumble of the struggles of the Church and the chronicles of those years. Its bells accompany the life of a country that had at first received with distrust and suspicion of the newcomers. The monks get up at midnight to recite Matins in choir, in their cells before dawn to meditate on the Scriptures and the texts of the Fathers, meet at six in the church of the monastery for the singing of Lauds, then who among them have been ordered to celebrate the sacred side altars mass "read" in Latin according to the Roman Missal promulgated by John XXIII in 1962. A few faithful braving the cold of the morning comes and kneels to follow the liturgy in absolute silence. Then, all the works you start the day.
The monastery is practically self-sufficient. The 52 monks (some of them very young, the average age is 46 years) that now make up the community (plus another 13 who have founded a new one in the south-west France) live only for their work, according to tradition Benedictine. The land of the monastery produces oil and wine, bakery ensures the needs of the community and sells biscuits, baguettes and pastries to the locals or tourists. For some years the monastery has also opened a mill in the rural community that offers the service of pressing of the olives, using two grinding wheels made of stone come from Tuscany, and especially moved by modern machines. Even the printing works at full capacity, not only for printing missals with the traditional Roman rite, but also to meet the needs of the small publishing house founded by Dom Gerard. The prayer of the Benedicite opens meals, vegetarian and consumed in silence, with the guests in the middle of the refectory, the abbot solemnly accepted that greets them washing their hands in sign of welcome. A reception that also includes a night shelter for those in these parts does not have a roof under which to sleep. Over time, lunch or dinner a monaco reads a spiritual reading or sometimes even a history book or a more general culture.

We are not the greatest of our Fathers
"The traditional liturgy is full of signs that remind us of where it comes from faith, and teaches us that we are not the greatest of our Fathers, but send only what we received." There is controversy in the words of Father Abbot Louis-Marie, a friend and disciple of Dom Gerard, who left the pastoral community in 2003, resigning five years before his death. Moreover, the experience of beauty that comes from that liturgy is not the exclusive prerogative of this monastery. Other monasteries in France today adopt this form of prayer. Abbot explains: "In France, secular, once told me a bishop in Ukraine, seems to see a great spiritual desert, but in this desert oasis, there are very beautiful." Not only at Le Barroux. Something is moving, without the rigidity of the patterns of twenty years ago. The relationship between the monastery and the diocese of Avignon, which is the foundation of Dom Gerard, is not more tense as before. The abbot goes every year to concelebrate with the bishop on Holy Thursday Chrism Mass, and many priests of the diocese are open to this monastic experience fostering bridges of communication with the French Church. More generally, Father Louis-Marie says, "people seem drawn here not only and exclusively because it is celebrated according to the Council prior to the Roman rite, but simply for the beauty of monastic prayer, for the Gregorian chant which here runs , because this prayer is lived and felt in the depths of silence, turned to God. "
Every year, hundreds of priests coming mainly from France, Italy, Germany, Great Britain and Holland, to spend the Barroux few days of withdrawal, to speak with the monks or to learn how to celebrate the Mass according to the ancient ritual. The monastery has about three hundred Oblates of priests, lay people and families that refer to Benedictine spirituality.
vocations arriving in Le Barroux, now at the rate of two or three a year, have the most diverse origins.There is a young monaco coming from a military career, another who was an engineer in China and Le Barroux has known through the internet site of the monastery, a third party who has asked to be baptized twenty years a priest of Marseilles, and then tried the path of vocation in a religious order but had not appeared "demanding". And then that same priest brought him here, "because one of the things that attract people to a place like this," said the abbot, "is a free choice of evangelical radicalism." Free radical and are the two adjectives that resonate more within these walls. Some Lefebvrists, not many for the truth, they approach the experience of Le Barroux as a bridge for a return to full communion with the Church, but also because, says the abbot, "the Society of St. Pius X feel to breathe Sometimes heavy air, characterized by what they think could be called a clerical authoritarianism. "
It is as if you compose a different balance here, not based on compromise, or on the contrast with other ecclesial realities, but simply the return to the Rule of St. Benedict as a way to bring the heart of Christian life. "In recent years," adds the father abbot, "we have found that the monasteries that have bothered to innovate and revolutionize the forms of religious life today are those that have fewer vocations in France. I believe that in addition to the dynamism and vitality that they see in this young community, a gift that we have inherited from our founder, young people are attracted to the radical nature of Le Barroux right choice for God, as well as by the beauty of the liturgy which is celebrated here . But is not everything, after all this is not the essential. Myself when I got here, and I fell in love with this place, from the sound of bells, to the care with which it is celebrated the divine office, I immediately realized that the monastic life is nothing more than a holocaust, a total offering of himself to God. "
In the evening, the sound of the bells call everyone to Vespers, now perhaps more intimate with the solemn liturgy. While the voice of prayer is spreading in the hour of twilight, and the shadow of the crucifix above the altar stretches naked on the stone wall of the apse, suddenly everything seems clearer. And are the words with which the Abbot concludes this reflection on his fascination for this place: "The things I said are real, but secondary. The last appeal of a vocation is simply the good Lord for this is that the vocation, every vocation is fundamentally a mystery. "

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Sex and advertising Retail therapy How Ernest Dichter, an acolyte of Sigmund Freud, revolutionised marketing

2011-12-18T10:58:00.002+01:00

Sex and advertising

Retail therapy

How Ernest Dichter, an acolyte of Sigmund Freud, revolutionised marketing

Dec 17th 2011 | from the print edition

THESE are thrilling days for behavioural research. Every week seems to yield a new discovery about how bad people are at making decisions. Humans, it turns out, are impressionable, emotional and irrational. We buy things we don’t need, often at arbitrary prices and for silly reasons. Studies show that when a store plays soothing music, shoppers will linger for longer and often spend more. If customers are in a good mood, they are more susceptible to persuasion. We believe price tends to indicate the value of things, not the other way around. And many people will squander valuable time to get something free.

The sudden ubiquity of this research has rendered Homo economicus a straw man. Yet such observations are not new. Analysts have been studying modern man’s dumb instincts for ages. Sigmund Freud argued that people are governed by irrational, unconscious urges over a century ago. And in America in the 1930s another Viennese psychologist named Ernest Dichter spun this insight into a million-dollar business. His genius was in seeing the opportunity that irrational buying offered for smart selling.

At a time when national companies were aggressively jockeying for position among Americans—a suddenly cash-happy and acquisitive bunch—Dichter promised a way to influence consumers’ brains. If shopping was an emotional minefield, then strategic marketing could be a gold mine for companies.

“You would be amazed to find how often we mislead ourselves, regardless of how smart we think we are, when we attempt to explain why we are behaving the way we do,” Dichter observed in 1960, in his book “The Strategy of Desire”. He held that marketplace decisions are driven by emotions and subconscious whims and fears, and often have little to do with the product itself. Trained as a psychoanalyst, Dichter saw human motivation as an “iceberg”, with two-thirds hidden from view, even to the decision-maker. “What people actually spend their money on in most instances are psychological differences, illusory brand images,” he explained.

Between the late 1930s and 1960s Dichter became famous for transforming the fates of businesses such as Procter & Gamble, Exxon, Chrysler, General Mills and DuPont. His insight changed the way hundreds of products were sold, from cars to cake mix. He pioneered research techniques such as the focus group, understood the power of word-of-mouth persuasion and earned startling fees for his theories. By the late 1950s his global business reached an annual turnover of $1m ($8m today), and he enjoyed a reputation as the Freud of the supermarket age.

Dichter’s radical approach to goading shoppers, called “motivational research”, was considered so successful that he was even accused of threatening America’s national well-being. Americans have become “the most manipulated people outside the Iron Curtain,” complained Vance Packard, a sociologist and virulent critic, in his 1957 book “The Hidden Persuaders”. Even so, Dichter’s fame waned long before he died in 1991. He spent his later years as a discarded guru in Peekskill, New York, scribbling the occasional book about management or motivation. Media research moved on; his name has largely been forgotten. Yet many of his ideas about the role of the unconscious in sales are now back in fashion.

Well before Dichter and Freudian analysis, American businesses had spent decades trying to decipher market patterns. Such efforts date from the late 19th century, when new polling techniques were used to suss out the needs of consumers. This trend picked up after the first world war, as national brands began dominating the marketplace and companies invested more time and money in edging out competitors. In the late 1920s and 1930s advertising executives were encouraged to mingle with the masses to discern preferences and interview shoppers.

But these surveys were ultimately slapdash and speculative. Businesses were recognising the limits of quantitative studies (dismissively described as “nose counting”), which offered little genuine insight into how customers behaved. Asking shoppers why they bought particular products was like “asking people why they thought they were neurotic,” quipped Dichter.

In fact, he believed, most people have no idea why they buy things. They might answer questions in an effort to be helpful (particularly in the early 20th century, when consumers were chuffed to be asked to share their thoughts). But these were attempts to make sense of decisions retrospectively. To understand what truly motivated people, Dichter said, it was necessary to get them to talk at length about their everyday habits. Instead of subjecting many people to quick questionnaires, he preferred a deep, psychoanalytical approach with fewer participants: “If you let somebody talk long enough, you can read between the lines to find out what he really means.”

Dichter had arrived in America in 1938, the perfect time for these ideas to take off. The intellectual environment was just opening up to new and unorthodox concepts; Freudian psychology was becoming sexy. The idea that there was more to human behaviour than meets the eye was becoming widespread. Freud’s notions of subconscious urges and socialised inhibitions seemed to make intuitive sense. Even Albert Einstein, America’s patron saint of the hard sciences, sought out Freud’s counsel in the run-up to the second world war, praising him for his “critical judgment, earnestness and responsibility”.

Psychoanalysis became particularly popular in post-war America, a time of abundance, conformity and anxiety about being “abnormal”, observes Lawrence Samuel, author of “Freud on Madison Avenue”. Nothing makes people more neurotic than the expectation that they should be enjoying themselves.

For advertisers, argues Mr Samuel, Freud was a “godsend”. When goods were scarce and people bought what they could get, it was hardly necessary to understand consumer psychology. But in an age of prosperity, when supply outstripped demand and countless indistinguishable goods were competing for buyers, companies had to rely more heavily on branding and advertising. There was a clear need to improve upon existing campaigns, which often simply announced the benefits of a product with grand promises and sparkling smiles (for example a print ad from 1925 for Johnson’s Liquid Wax: “This New Easy Way to have Beautiful Waxed Floors”).

From Vienna to New York

American businesses suddenly needed to understand and channel the desires of consumers. And Dichter—well, he “made their heads explode”, says Mr Samuel.

A 31-year-old Jewish psychologist fleeing Hitler’s rise in Europe, Dichter came to New York with his wife Hedy and $100 in his pocket. The city was suddenly full of fellow Austrian Jewish PhDs; with the help of Paul Lazarsfeld, his former statistics teacher, Dichter quickly got a job at a market-research firm in Manhattan. Dichter is credited with popularising motivational research, yet it was Lazarsfeld who first discovered the value of qualitative research based on lengthy interviews. He understood the psychological roots of consumer decisions, but he remained wedded to finding statistical proof for his theories, and went on to found Columbia University’s Bureau of Applied Social Research.

Dichter saw this as “naive empiricism” and decided to venture off on his own. A gifted self-promoter, he saw the city as a welcoming place for a young man with big ideas about subliminal desires, sex and sales.

In 1939 he wrote to six big American companies, introducing himself as “a young psychologist from Vienna” with “some interesting new ideas which can help you be more successful, effective, sell more and communicate better.” Mindful of Freud’s nascent appeal on Madison Avenue, he emphasised that in Vienna they had lived on the same street. (Dichter had studied psychoanalysis in Austria, but with Alfred Adler and Wilhelm Stekel, not Freud himself.) With help from Lazarsfeld, he heard back from four companies. Having secured these contracts, Dichter came up with the concepts that would make him famous.

The consumer on the couch

What makes soap interesting? Why choose one brand over another? Dichter’s first contract was with the Compton Advertising Agency, to help them sell Ivory soap. Market research typically involved asking shoppers questions like “Why do you use this brand of soap?” Or, more provocatively, “Why don’t you use this brand of soap?” Regarding such lines of inquiry as useless, Dichter instead conducted a hundred so-called “depth interviews”, or open-ended conversations, about his subjects’ most recent scrubbing experiences.

The approach was not unlike therapy, with Dichter mining the responses for encoded, unconscious motives and desires. In the case of soap, he found that bathing was a ritual that afforded rare moments of personal indulgence, particularly before a romantic date (“You never can tell,” explained one woman). He discerned an erotic element to bathing, observing that “one of the few occasions when the puritanical American [is] allowed to caress himself or herself [is] while applying soap.” As for why customers picked a particular brand, Dichter concluded that it wasn’t exactly the smell or price or look or feel of the soap, but all that and something else besides—that is, the gestalt or “personality” of the soap.

This was a big idea. Dichter understood that every product has an image, even a “soul”, and is bought not merely for the purpose it serves but for the values it seems to embody. Our possessions are extensions of our own personalities, which serve as a “kind of mirror which reflects our own image”. Dichter’s message to advertisers was: figure out the personality of a product, and you will understand how to market it. Soaps could be old or young, flirty or conservative. Ivory, Dichter inferred, had a “sombre, utilitarian, thoroughly cleansing character”. It was the mother-daughter of soaps, whereas a brand like Camay was a seductress. Such insights led to the slogans “Be smart and get a fresh start with Ivory Soap” and “Wash your troubles away”.

But the innovation that put Dichter on the marketing map involved a problem Chrysler was having with its relatively new line of Plymouth cars—which consumers were shunning. Dichter headed out to Detroit, conducted extensive interviews with a couple of hundred people, and deduced that the company’s first problem was its existing advertising, which boasted that its cars were “different from any other one you have ever tried”. This evidently triggered an unconscious fear of the unknown among buyers, for whom familiarity in a car meant safety.

He also learned from interviews that whereas convertibles made up only 2% of sales in 1939, most men, particularly middle-aged ones, dreamed of owning one. When convertibles were placed in the windows of dealerships as “bait”, more men came in. But when they returned actually to make a purchase, they typically came with their wives and chose a sensible sedan (the Plymouth line offered both).

Dichter gathered that the convertible symbolised youth, freedom and the secret wish for a mistress: an idle bit of temptation. He suggested that Chrysler beef up its convertible advertising—and, in recognition of spouses’ role in the final decisions, begin marketing cars in women’s magazines. Meanwhile, a new and more reassuring campaign emphasised that it would take “only a few minutes” to feel at home with the new Plymouth.

Reporting on the campaign’s success, Time described Dichter as “the first to apply to advertising the really scientific psychology” that tapped “hidden desires and urges”. He chalked up his own success to the importance of examining “not how people shouldbehave but how they do behave”.

Don’t go overboard

Business was good for Dichter. In 1946 he set up his Institute for Motivational Research in Croton-on-Hudson, outside New York City; it was soon followed by a dozen satellite offices in America and abroad. His unique approach to marketing—a mix of observation and imagination—was particularly popular in the 1950s, when industry leaders would queue up “like desperate patients for a miracle medical doctor,” writes Ronald Fullerton, a marketing specialist and academic. A charismatic salesman, Dichter flipped Freud’s pessimistic ideas about childhood traumas and buried urges into opportunities for seeking pleasure and fulfilment in everyday purchases. At a time when on-screen married couples still slept in separate beds, his colourful take on the sexual relevance of ordinary objects got attention.

Dichter’s case history is a fascinating mix of outlandish ideas and now-conventional solutions. To elevate typewriter sales, he suggested the machines be modelled on the female body, “making the keyboard more receptive, more concave”. People smoke, he explained, because it is both a sign of virility and a legitimate excuse to interrupt the day for a moment of pleasure, “comparable to sucking at the nipples of a gigantic world breast”. A phallic shape to lipstick increased sales by the way it offered a subconscious invitation to fellatio (“but one has to be careful not to go overboard and make the parallels too obvious,” Dichter cautioned). Prunes had an image problem as they were seen as a “symbol of old age”, like “dried-out spinsters”. To inspire demand, Dichter suggested they be branded the “California Wonderfruit” and feature fresh, supple plums on the packaging. Prunes have been marketed using images of their younger selves ever since.

Baking is an expression of femininity, he explained, so when a woman pulls a cake or loaf out of the oven, “in a sense it is like giving birth”. Thus mixes that require the cook to add only water are threatening to women, since their role is marginalised; these days, thanks to Dichter, nearly all such mixes involve adding eggs, a symbol of fertility. In her book “Food is Love”, Katherine Parkin notes the way he encouraged advertisers to impress on women the importance of cooking as a way of showing love.

Dichter recognised that in the new world of America, brands had become “a substitute for nobility and a family tree”. People seek out products that correspond with the group they want to associate with. Every object has a special meaning—one that often relates to sex, insecurity or a desire for prestige. He also understood that consumers felt guilt after buying self-indulgent products, so marketers had to sell such things as tobacco and candy as “rewards” for the deserving. Much of this is taken for granted now, but when Dichter was whispering these sweet nothings in the ears of CEOs, they were revelatory.

For Dichter, the ability to express oneself through shopping was a matter of great importance. After a childhood that had been defined by serious poverty, near-starvation and prejudice, he saw America as a beacon of democratic capitalism, with limitless opportunities to grow and express individuality. (Soon after immigrating he took lessons to drop his Viennese accent so he would sound “all-American”.) But he also viewed Americans as a puritanical bunch, incapable of embracing change without anxiety, or spending money without remorse. He worried that this inability to enjoy progress would cripple the country’s economy, which served as a crucial bulwark against the Soviet Union. If consumer culture was America’s best defence against communism, then motivating materialistic desires was an investment in the country’s future.

Dichter’s colourful take on the sexual relevance of ordinary objects got attention

To ensure national security, Americans needed to learn how to please themselves in realistic but ephemeral ways. “To some extent the needs and wants of people have to be continuously stirred up,” he argued, so that everyone will work hard to buy what they desire. In the early 1950s he discerned that, when Americans borrowed money, they preferred to do so from loan sharks at high interest rather than from a bank, because they saw bankers as judgmental father figures, whereas loan sharks lacked the authority to moralise. He advised one bank to advertise checking accounts with overdraft facilities, recognising that people wanted more money than they had but didn’t want to take out loans. As for credit cards, Dichter presciently called them “magic” for the way they provided “the American consumer with a symbol of inexhaustible potency.” One can only imagine what he would make of America’s latter-day spendthrift habits.

Yet the abundant 1950s also gave rise to criticism about the emptiness of affluence and the perversity of advertising. In “The Hidden Persuaders”, Packard targeted Dichter for exploiting the emotions of consumers to inspire a national glut of self-indulgence. He claimed that motivational researchers such as Dichter, with their scientific cunning and Freudian voodoo, had unleashed the “chilling world of George Orwell and his Big Brother”. Ironically, Packard’s dramatic assessment of Dichter’s dark powers ended up bringing him plenty of new business.

A year later John Kenneth Galbraith released “The Affluent Society”, in which he described a country increasingly riven by economic divisions but too selfish to care. Then in “The Feminine Mystique”, in 1963, Betty Friedan took Dichter to task for being “paid approximately a million dollars a year for his professional services in manipulating the emotions of American women to serve the needs of business.” Though women were taking important steps beyond the home, Friedan accused advertisers of exploiting their homemaking insecurities in order to keep them in the kitchen with such gal pals as Betty Crocker and Aunt Jemima.

Back to Vienna

By the early 1960s Freudian analysis was falling from favour. The talking cure suddenly seemed too soft, too unscientific and sometimes too weird. This poisoned the market for Dichter’s insights, which were often profound but occasionally bizarre and impossible either to validate or disprove. In his book “Marketing Myths That Are Killing Business”, Kevin Clancy describes hiring Dichter to weigh in on a Pepsi campaign. “Kevin, stop!” Dichter blurted. “You are showing Pepsi in all these commercials with ice…You must not do this…You are associating your client with death!” His verdict labelled “too nutty”, Dichter was sent packing.

The rise of the computer in the 1960s introduced new quantitative methods of researching consumer attitudes, which promised greater scientific purity. Instead of presuming that secret motivations for buying detergent lurked in the traumatised subconscious, it seemed safer and wiser to study behaviour and create mathematical models based on income and geography.

Meanwhile the development of the cognitive sciences from the late 1950s through to the 1970s offered new empirical methods for considering such things as memory and problem-solving. Psychologists, anthropologists and behavioural scientists studied human behaviour to help understand mental development. By the 1980s scientists exploring the brain were examining how people handle information and make decisions.

But more recent developments in neuroscience have inspired fresh questions about instincts and desires, unconscious prophesies and gut decisions. New information about human cognition has led the hard sciences back to the same sort of concerns that preoccupied psychoanalysts in Vienna a century ago.

Thus what was once the domain of Freud and Dichter has been appropriated by researchers in lab coats. Yet many of the theories sound remarkably similar—albeit with rather less emphasis on Oedipal urges and castration anxieties. “Recent published findings in neuroscience indicate it is emotion, and not reason, that drives our purchasing decisions,” reported Mobile Marketer magazine earlier this year. The quantitative trends that tossed Dichter aside have ultimately led back to his ideas.

Companies selling insight into the consumer unconscious are now quick to couch their approach in empirical terms. “Over 85% of consumer buying behaviour is driven by the non-conscious,” explains Buyology Inc, which launched in 2009 in New York as “the world’s leading strategic neuro-insight company”. Using “statistically rigorous, large-sample web-based tools”, the company promises to unearth the real drivers of buying decisions. Then there is the Zaltman Metaphor Elicitation Technique (ZMET), a patented interview process used by companies around the world that guarantees to go “beyond what people say to reveal what they actually mean.” Rooted in neuroscience, ZMET’s one-on-one exchanges use images and metaphors to get at the deeper thoughts and feelings of a consumer. “A lot goes on in our minds that we’re not aware of,” explained Gerald Zaltman, a business professor at Harvard, after he came up with the idea.

“We’ve come back full circle,” confirms Baba Shiv, director of the Strategic Marketing Management Program at Stanford. “Emotion is back in, the unconscious is back in.” It is now fashionable to study brain waves to see what lights up upon hearing the words “Coca Cola”, or to measure pupil dilation in response to brand logos. But these studies don’t explain why something is happening, or what its effect might be in the real world. Rather, they create a framework for new assumptions, new leaps of faith, new ways to tell stories about the irrational choices people make. Human behaviour remains mysterious, and there is still no certain way to persuade people to buy a particular brand of soap. Ernest Dichter knew that, too, but his stories about what motivates us are still some of the best around.

from the print edition | Christmas Specials

SELECTED BLOGS: BRAD DELONG // AN UNSATISFACTORY PLATONIC DIALOGUE ON THE IMPACTS OF QUANTITATIVE EASING...

2011-12-17T18:45:00.001+01:00

AN UNSATISFACTORY PLATONIC DIALOGUE ON THE IMPACTS OF QUANTITATIVE EASING...

Thrasymakhos: So Jan Hatzius and company at Goldman Sachs think that the Federal Reserve should take the Federal Reserve's balance sheet up from $3T to $5T, and announce that it will take the balance sheet higher if necessary unless and until nominal GDP growth rises to 7% per year--and maintain that higher nominal GDP growth rate until total nominal spending gets back to its pre-2007 trend.

Adeimantos: But why should the nominal GDP growth rate rise? The Federal Reserve buys $2T of bonds and creates $2T of cash, but--as Robert Barro says--this is simply swapping one zero-yield government asset for another, and will have no effect on anything.

Glaukon: But Jan wants the Federal Reserve to buy not short-term debt but long-term debt--agency debt and long-term Treasuries and related securities with an average interest rate not of 0% but of 3%/year.

Kephalos: It seems to me that that is relatively little. Say half of that interest rate is an expectational effect--a belief that short-term interest rates will rise in the future and thus that long-term bonds should incorporate that expected rise in their interest rates. That leaves 1.5%/year as compensation for bearing risk. That means that $2T of quantitative easing means that the Federal Reserve takes onto its books and bears risk that the private market currently values as worth $30B a year to bear. That does not seem to me to be very much. Total GDP originating in Finance and Insurance is, after all, $1.2T. $30 B is only 2.5% of that "GDP originating" total...

Thrasymakhos: Is that small? The $1.2T of GDP originating in Finance and Insurance is a slippery beast. Real insurance, for one, should not be in there--that's $400B a year that insures indiviuals against fire and flood and accident and has nothing to do with providing the risk capital to finance economic activity. And of the remaining $800B, my guess is that 1/4 is the casino: Wall Street as Las Vegas charging people for buying and selling as they watch their stocks go up and down. 1/2 is the scarcity of capital: the fact that access to finance so that you can buy and build capital is valuable whether it is really risky or not. That leaves only $200B a year that is compensation for bearing risks. $30B is 15% of that.

Glaukon: So if $200B a year of risk-bearing capacity drives $1.2T a year of investment spending, then adding $30B/year to that risk-bearing capacity has the potential to drive an extra $180B a year of investment?

Adeimantos: Add a multiplier of 2 to that and you have an extra $360B a year of GDP--enough to push the unemployment rate down by maybe 1.5 percentage points. That gets us down from 9.1% to 7.6%.

Kephalos I don't think that this argument is well-grounded in either theory or the data. I know that I have never seen anybody seriously think about the relationship between economy-wide risk tolerance and aggregate investment spending, and that is what we would need to make these kinds of arguments...

SELECTED BLOGS: BRAD DELONG // I DON'T FULLY BUY STIGLITZ'S ARGUMENT THAT OUR MACRO PROBLEMS HAVE DEEP STRUCTURAL ROOTS. BUT I DO SEE ITS COHERENCE

2011-12-17T18:10:00.001+01:00

http://delong.typepad.com/sdj/2011/12/i-dont-fully-buy-stiglitzs-argument-that-our-macro-problems-have-deep-structural-roots-but-i-do-see-its-coherence.html

JERUSALEM

2011-12-17T17:42:00.002+01:00

How Did Fannie and Freddie Get to be the Symbols of the Housing Bubble?

2011-12-17T15:49:00.000+01:00

How Did Fannie and Freddie Get to be the Symbols of the Housing Bubble?

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