Wednesday, May 18, 2005

The Long Thief in the Night

The ever-insightful Brad Delong expounds thusly and deserves to be reproduced at length, my response follows:

Voodoo Economics | Thief Poetry | Alphabet St Blues

Our Twin Financial Puzzles: The Long Run May Come Like a Thief in the Night

The optimists--inside the administration and out--about the current financial situation have only one economic argument: long-term interest rates are relatively low, and are not pricing the dollar-collapse and the U.S.-interest-rates-spike scenarios as having any substantial probability at all.

The pessimists on Wall Street are puzzled at why this economic argument is supposed to have force. From their perspective, demand for long-duration dollar-denominated securities is high because the Asian central banks are buying as if there were no tomorrow in order to keep the value of their currencies down, the U.S. Treasury is borrowing short (it is not issuing that many long-duration securities), and U.S. companies are cautious and are not undertaking the kinds of investments that would lead them to issue lots of long-duration bonds.

We economists respond by saying that for every market mispricing there is an open profit opportunity: if long-term interest rates are indeed too low--if long-term bonds are indeed priced too high--there is money to be made by shorting long-term U.S. bonds, parking the money in some other investment vehicle that is not underpriced, waiting for bond prices to return to fundamentals, and then covering your short position. People will try to profit from trades like this, and in so doing they will push prices close to fundamentals today.

The long run in which the dollar falls and U.S. long-term interest rates rise may come like a thief in the night as a very sudden shock. If it comes as a sudden shock rather than as a long, slow, gradual realization, it will come on that day when the gestalt of the players on Wall Street and elsewhere changes, and when they collectively regard holding dollars as the more risky rather than the less risky strategy in the short run, when they collectivley regard being long long-term U.S. Treasuries as the more risky rather than the less risky strategy in the short run. On that day the long run future will be, as football coach George Allen used to say, now.

When will that day come? Tomorrow? Next month? Next year? On January 21, 2009? A decade from now? We macroeconomists who believe in financial market equilibrium have, today, a certain similarity to Millenniarists: our models of when The Day will dawn are not much better than the models of those who base theirs on a rule that transforms HILLARY RODHAM CLINTON into the number 666.

Thief Poetry

Right-on Brad.

You've spurred me to an admittedly meagre poetic contribution to the debate, my last poem was 16 years ago:

The Long Thief in the Night

Estate Tax writ large as Death Tax
Social Security painted as The Coming Crash
No need for Health Care or Medicare
War sans Galloway will prevent The Great Crash
It's Our Time!
Spend! Attack!
All hail them:
The Cook, the Thief, His Wife & Her Lover

The only question is who will have the starring roles in this straight-to-VHS B-Movie (DVDs aren't an option). Is Greenspan the cook? Ken Lay's role is obvious but between Dubya, Cheney and the faceless, but very serious, wonks who are re-writing regulations and policies everwhere, who will round out the cast?

Alphabet St Blues

To the tune of Prince's Alphabet St
I'm Going Down 2 Alphabet Street
I'm Gonna Crown The First Girl That I Meet
I'm Gonna Talk So Sexy
She'll Want Me From My Head 2 My Feet

Yeah, Yeah, Yeah
Yes She Will
Yeah, Yeah, Yeah (Yeah)
Yeah, Yeah, Yeah

I'm Gonna Drive My Daddy's Thunderbird (My Daddy's Thunderbird)
A White Rad Ride, '66 ('67) So Glam It's Absurd
I'm Gonna Put Her In The Back Seat
And Drive Her 2... Tennessee

Yeah, Yeah, Yeah
Yeah, Yeah, Yeah, Tennessee
Yeah, Yeah, Yeah, Drive Her

Excuse Me, Baby
I Don't Mean 2 Be Rude
But I Guess Tonight I'm Just Not, I'm Just Not In The Mood
So If U Don't Mind (Yeah, Yeah, Yeah)
I Would Like To... Watch

Yeah, Yeah, Yeah... Can I?
Yeah, Yeah, Yeah
Yeah, Yeah, Yeah (Can I, Can I, Can I, Can I)

We're Going Down, Down, Down,
If That's The Only Way
2 Make This Cruel, Cruel World
Hear What We've Got To Say
Put The Right Letters Together
"And Make A Better Day"


Yeah, Yeah, Yeah, Better Days

Yeah, Yeah, Yeah, It's O-O-K
Yeah, Yeah, Yeah
If you use a file-sharing network, try to get the Alphabet Street Blues bootleg version, there's also a hilarious hillbilly country version if your tastes are that way inclined. I think that the blues version is a better soundtrack to our current economic predicament than the devastating dancefloor funk of the original version.

Lovesexy was a kind of spiritual rebirth for my favourite diminutive Minneapolis purpleness, a kind of metaphorical return to the Garden of Eden. He deliberately made the cd have only a single track so that you couldn't skip to the chicken grease snippets that you loved; he meant for the work to be considered as a whole. Artists get too self-important at times. It should be listened back to back with the Black Album which a fun party album but dark in it's own way, read Bob George and the threats to rappers, his managers and critics like Nelson George whom he hilariously shot verbal bullets at before his sociopathic persona killed himself before the undoubted hail of police bullets arrived, 41 shots to the dome but 10 years earlier. 2 Nigs United 4 West Compton has the best bass solo I've ever heard, it is also the most hyperactive instrumental jazz-funk I've had the pleasure of listening to.

Prince cancelled the Black Album in a little crisis of conscience just as it was about to be released making it one of the most bootlegged albums ever and recorded Lovesexy in just a few weeks. This was at the time that he was working with Miles Davis and so there are polyphonous horns all over the place and the funk is dense psychadelia, cacophonous and etherearal. George Clinton and Sly Stone were proud of what he came up with even if it was less danceable than say Erotic City (the best B-side ever). As a work, it echoed the recurrent motif of black music througout the years, namely the dichotomy between the church and the earthy jook joint, love and sex as the title track puts it. On the whole, this was a turn towards heaven and religion, Anna Stesia and I Wish U Heaven are all pointers to that rebirth. The repeated chant is "This is not music. This is a trip"


Still as with everything Prince does, it was all tongue-in-cheek, like the misunderstood naked title cover which damaged his prospects in the US market. Critics asked how could someone be so naive as to appear naked at a time when it was all about machismo and gangsta rap? Echoes of De La Soul in the Stakes is High video showing them doing laundry and rodeo-riding in a time of Bling Bling, guns and gold chains. But maybe that was the point.

The line about "Put the right letters together 'and make a better day'" was about clowning the rock star economics of the USA for Africa We Are The World effort from which the "make a better day" part was a literal quote.

Update: removed the Lovesexy photo. This is a family-friendly joint after all; wouldn't want to alarm Real Men.

Looking at the headlines, one wonders: Who has the single-tracked mind? Who has no clothes these days?
In any case, cultural critique at its best.

Slightly edited Blogcritic version.

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