Mythic Prelude:

Blowing Bubbles

Ah. Come join us. You're just in time. Take your place in the circle here. As you can see, we all stand with our hands placed in the center of the back of the people on either side of us, so our hands are on the back door of the hearts of the people to our right and our left, as we cover and hold their hearts from behind. Now -- bend forward a little as you blow all the air out of your lungs. Keep blowing, even if you wheeze or cough a little until you get every molecule of air out of your lungs. Then take a nice full breath.
Why do we do this? Partly so we expel from our bodies the stale air we carry all the time, and we're filled now with air that is clean or at least new, as we start this chapter of the UFC. And partly to congratulate you, because you've just become a qualified economist. The small rush of carbon dioxide and water vapor that you've just exhaled has the same weight, substantiality and real value as the professional opinions of economists all over the world to whom people turn now for information, guidance and reassurance in this time when sweeping economic change is underway, and many human beings fear that a financial meltdown, a collapse of the world banking system, a calamity as complete as the Great Depression of the 1930's could blow in or bubble up from wherever these things form and fester, threatening us all with images as dark as the Dust Bowl, and characters even scarier than Hitler, Stalin and Leo Durocher.
Does blowing all the air out -- you can drop your hands, and just breathe normally -- mean that you're entitled now to a Ph. D. from the University of Chicago or the London School of Economics? No, you still have to study all the models and numbers, work with professors and do other academic things to be technically qualified to teach economics, or to speak officially about it. Am I being flippant here because I'm like the "desert philosopher" in Rumi's "Two Sacks," who tells the bedouin camel trader, " I don't have enough for supper tonight. As you see, I have no shoes. If someone offers me a loaf of bread, that's where I go next. My clever mind has gotten me only headaches and fantastic imaginings"?
Not really. I own not only shoes, but rubber slippers too. I've been known to relish more than just bread at a meal. And I'm not a poverty snob, or self-righteous povert who believes money is dirty, and he is virtuous because he has little or none of it. And even discounting the truth that I got a C in the "dismal science" in college -- it was my worst subject, taught by a nervous man who looked like Wally in the Dilbert cartoons and had a voice like an alarmed Pekingese -- the fact is that economics has little to do with "real life." It relates mainly to itself, in the same way that most movies don't resemble "life" but just keep replicating other movies. How do we know this is true? Because the economists themselves keep talking about how irrelevant economics is to anyone's actual life.
As of this writing in late October, 2007, as we near the beginning on Nov. 18 of the Fifth Night in Carl Johan Calleman's Galactic Creation Cycle, and his predictions of widespread economic transformation gain more and more attention, this year's Nobel Prize recipients have just been announced, and, as always, a chorus of doubt, skepticism and even ridicule has ensued -- not against the distinguished prize winners, of course, but against the prize in economics itself and the criteria for awarding it. The Nobel Prizes in Economics have been debated in recent years for being too ideological, especially when a whole string of prizes were won by professors at Milton Friedman's "Chicago School," which seemed at that time a virtual think tank for American capitalism. Even winners of the Economics Prize, such as Gunnar Myrdal, have suggested it be abolished because it's too deeply tainted with political agendas, and too closely tied to the interests of Wall Street and other markets. At best, other critics complain, Prize contenders are so preoccupied with the rarefied elegance of "econometrics" that they've forgotten what economy literally meant when the Greeks coined the word: house management, the practical business of keeping the people and animals in the home in basic wine and olives, hay and linen, chairs and crockery.
"They're not engaged in the problems of the actual world," James Galbraith has opined about the economists who tend to win Nobel Prizes. And his colleague Barbara Bergmann has said that the same applies to the economists' profession as a whole, preoccupied as it is with theoretical models rather than research in the workings of actual economies. No one seems to feel, though -- not yet -- that economics should be designated a kind of game, like fantasy football, played on machines by imaginary figures who are as conscious of human needs and hardships as the mathematicians whom Swift imagined on the flying island of Laputa in Gulliver's Travels, so rapt in their abstract numbers that they have to be brought back to mundane consciousness now and then by servants who tap them with inflated bladders to keep them from falling off the island.
What is one sure sign that a number of economists are seriously unfastened from actual life as you and I tend to experience it on the ground? The fact that when the Nobel Prizes are awarded in chemistry, physics, medicine, literature and peace, people may disagree about whether this winner or that deserved the prize, but no one ever says that any of these fields of science and art is irrelevant to our lives. Only economists, it seems, get so wrapped up in the criteria and the abstract modeling that they fail to notice what's as obvious as it can be to the rest of us. The winner flies to Stockholm and receives his prize in the presence of King Harald V of Norway in front of an audience of scholars and celebrities in gowns and tuxedos. He gets to be on TV without having to be in a reality show. And the cash award may not be the annual oil revenue of Saudi Arabia, but it sure looks like a metric ton of money from where most human beings sit. We like to envision our inner Jack Nicholson smiling as he receives the check -- in Euros, please -- and uses it to bring into his life something a lot more immediate than econometrics. Only economists, it seems, are blind to the magic of this moment, and prefer to squabble about whether the Prize is worth doing.
Not that this disconnection between economists and life is anything new. "The economy depends about as much on economists," commented Anonymous, no one knows when, "as the weather does on weather forecasters," and Ludwig won Mises wrote that "Economics is not about things and tangible material objects; it is about men, their meanings and actions." If this is true, then economics must be as emotional and subjective as everything else that human beings do, with one telling exception. While everyone agrees that the economy is terribly important, no one has any confident, proactive sense of being able to affect it in any way. We can influence powerful companies by not buying their products. We can change government policies and even whole regimes by voting them out of office, if they haven't rigged the computers in their favor. But what, realistically, can we do about the economy itself, especially when we have so little understanding of it that even a people as skeptical as Americans invest the chairman of the Federal Reserve with the aura of a guru whose every word the pundits and stockholders hang on for some whiff of a hint of a clue about what is going on with their money, and what is coming soon?

There is reason for concern, obviously, and parallels are being drawn almost daily now between our present situation and the Crash of 1929, not least among them the significant truth reported this month in the Wall St. Journal, that the income inequality gap between the richest and poorest Americans is now the widest it has been since the 1920's. Other signs of trouble proliferate, and need not be listed here. What is most worrisome of all to some is that simple, time-proven investment methods have begun to give way to the much more intricate schemes of mortgage-backed securities, derivatives and other complex investments. Add to this the bankers' natural wish to obfuscate matters -- like priests, lawyers and physicians, they see the advantage of turning their practice into an arcanum -- and soon, as in now, the old clarity of prices that once made financial markets at least minimally predictable is gone. "Large parts of American financial markets," as the Journal put it, "have become a hall of mirrors," and master investor Warren Buffett has said that some investment companies have become so "imaginative" in their method of price quoting that it can no longer be called "marking to market, but . . . marking to myth."

So we have clearly crossed into mythic territory now, right where the UFC prelude belongs, in the realm where universal themes so powerful and compelling that they can't be reduced to simple definitions have to be expressed instead in symbols that convey what we feel about mysterious currents that we can neither see nor understand. No matter how seemingly easy the symbol of an economy is -- a beehive, an intricate machine, a game of chance -- few of us understand all the forces at work, even in the best symbol of our current situation:

The Bubble. The physical principle of it is easy. The thin membrane of soap film in a toy bubble is unstable because of the difference in air pressure inside and outside the bubble. Or, as every bubblegum fan knows, the bubble is filled with air until the pressure within is too much for the thin wall of the bubble, and it bursts. But the feeling is what matters.
The emotional angle of the bubble is where the mystery and the human weirdness are, as we all know how utterly fascinating it is to watch bubbles of soap, or rubber, or hope or money grow bigger, and bigger, and bigger. Does anyone ever think as the bubble nears the popping point that all right, that's enough now, let's let some of the air out so the bubble can get smaller again? Hardly ever. We want to see how big the bubble is going to get before it pops. Few of us can turn away from watching it.
Photo: Bubble Artist Keith M. Johnson
The bubble is not, thankfully, a symbol of how all economies work all the time, though it certainly fits the fervid mix of ambition, daring, greed and folly that drives some people so helplessly from a fever of speculation to the chill of ruin and back again for another ride on what is at best fortune's wheel -- like the Bubble -- and at worst a scheme like the Enron Bubble, the Derivatives Bubble, the Rank Xerox Bubble, the Worldcom Bubble, and now the Subprime Mortgage Loan Bubble, all rigged to enrich a few insiders at the expense of a great horde of clueless hunch players and profit pigs, so that no matter what happens, those who have most of the money will get still more of it. How come all these bubbles come crowding one after another the way they do? Because like the misery they bring, financial bubbles love company. Lots of littler ones follow the big ones. They always have, ever since 1720, when the celebrated South Sea Bubble in Britain and the Mississippi Bubble in France turned a few intrepid tiger sharks into great whites, and devoured whole schools of little fish.
Two London "stock jobbers" like the ones shown here, John Blunt and George Caswall, founded the South Sea Company in 1711 with the help of Lord Treasurer Robert Harley, as a kind of Tory counterweight to the Whig-heavy Bank of England. The deal was simple: the company got a monopoly on trade with Spanish colonies in South America, and the government could liquidate the huge
national debt that it had just incurred in the War of the Spanish Succession by converting it into South Sea Company stock. While the company never made much money from colonial trade, the transactions of converting the national debt into South Sea Company shares did return a modest annual profit until 1718.
Too modest. So South Sea Company cashier Robert Knight, seeing after seven safe years that investors were hungry for a hot new stew of risk, impatience and avarice, created a subsidiary company, pitching it irresistibly as "a company for carrying on an undertaking of great advantage, but nobody to know what it is." Does this sound all too eerily familiar only a few years after the bust, when venture capitalists invested billions in companies that did not yet exist, with little more to justify their heady choices than some exciting anime footage on a promotional CD? The rest is familiar too. When the South Sea Bubble burst, Robert Walpole led parliamentary investigations that uncovered every known species of corruption and some exotic new mutants too. Company officers, government ministers and the royal family were all implicated. Robert Knight escaped to France. Other malefactors suffered the 18th-century version of twisting slowly, slowly in the wind. Those who profited most handsomely remained hidden and unscathed. They almost always do.
This, at least, is how the story went in 1720 and still goes today. The intriguing question now is not really why crooks keep pulling these risky schemes. There are plenty of payoffs in the game, of which money is only one. The baffling question is why the buyers who are not in on the fix keep falling for the scam and holding out hope that it will be all right in the end. When the shares in the Mississippi Company ballooned from an initial price of 500 livres in 1719 to 10,000 livres a year later, should it have been obvious even to Louis XV's most snuff-addled courtiers that the fix was in among those who were about to sell and vanish? Should we add a 23rd major arcanum to the Tarot, the Stupid Crook, to represent all the people who burn themselves in get-rick-quick schemes? Or it enough that Caroline Myss, in Sacred Contracts, identifies the Victim as an archetype that can be purified by suffering? One way or another, it's clear that there are few people in the world who are mentally incomplete all the time, but very many who are simply too clever for their own or anyone else's good. And the numbers of these desperately ingenious people seem to increase geometrically with each year now, as uncertain and ominous times turn even the timid into would-be robber barons.
Even the possession of galactic-class intelligence does not make one proof against Bubble Madness. Master photographer Sheldan Collins, who knows a thing or a dozen about the manipulating of complex images and points of view, contributes this story from Charles P. Kindelberger's Manias, Panics and Crashes about "an outside destabilizing speculator who bought high and sold low: . . . a great Master of the Mint, Isaac Newton, a scientist and presumably rational."
"In the spring of 1720 [Newton] stated, 'I can calculate the motions of the heavenly bodies, but not the madness of people.' On April 20, accordingly, he sold out his shares in the South Sea Company for a solid 100 percent profit of £7,000. Unhappily, a further impulse suddenly seized him, an infection from the mania gripping the world that spring and summer. He reentered the market at the top for a greater amount and ended up losing £20,000. In the irrational habit of many of us who experience disaster, he put it out of his mind, and never, for the rest of his life, could he bear to hear the name South Sea."
Zounds! you may exclaim. If even one of history's greatest intellects can go so seriously off his fluxions, what chance is there that those of us who got lost on the math bus somewhere between trig and calculus can come through the coming economic adjustment in anything resembling safe, solvent shape?
It may appear that there is little we can do to avert an economic catastrophe. We see, but seem unable to stop, the corrupt bargain by which inept, avaricious lenders quietly buy enough politicians to pass a plan that will bail them out at the taxpayers' expense. We hear from the most unctuous crooks the beginning of the kind of austere Calvinist/Puritan rhetoric that Norman O. Brown had in mind when he wrote that "The dynamics of capitalism is postponement of enjoyment to the constantly postponed future," just as those who trust in "God" are willing to bear poverty and oppression in the hope of a heavenly reward. Whatever happens, no matter how hard one works or what standard he or she applies, economics remains incomprehensible in leftbrained terms. It's more a myth, a mystery that can be apprehended only in metaphors. It all seems out of our hands. Is there anything we can do, other than just run and jump reactively when events that we can't predict arrive whether we are ready and awake or not?
There are in fact two strategies: the practical and concrete one that has already worked, and the metaphysical one that only looks radical. Plan A has been tried successfully by the world's greatest teamworkers, the Japanese, who saved themselves from economic ruin a few years back by taking the air out of an economic bubble before it could burst. By the time the Japanese saw that the effect of speculation fever during their boom times of the 1970's and 80's was to mark stock prices and land values so aozora-high that some companies on the Tokyo Stock Exchange were priced at 27 times the value of their actual assets, the TSE had become a crash waiting to happen. The Finance Ministry took action when it still could, instead of reacting when it had to. The Japanese did not suffer their Bubble Economy. They announced it. They decided that some hard years ahead would be better than the collapse that could ensue if they did nothing. Instead of marking to myth, as Warren Buffett put it, or even to an overheated market, they started marking to actual value. It surely helped that even great, prestigious firms were responsible enough to cough up honest data, and it also helped that Japan still respects the samurai values of discipline and self-sacrifice for the greater good. The years since 1991 have not been easy, but the economy slowly, steadily improves, and without being jump-started by a war. The Bubble Economy has been a textbook case of what people can do when they put their mind to it.
Japan's proactive healing of its economy through collective will and intention shows what, in fact, an economy is. It's not an objective field of facts that can be plotted and measured. It's really just a communal opinion, a mindset or belief system held in common by a number of people who think that our city or country or region is rich, and we can get rich too if we work hard and get lucky. Or everyone but a prosperous few says the opposite: we're poor, we've always been that way and we always will be. This dreary thoughtform is often caused by belief in fate or karma or the will of "God" or some other force that keeps us in struggle no matter what we do, so we may as well accept our lot in life as gracefully as we can. In other words, take one person's high self esteem and high sense of abundance and deserving, multiply it by millions or hundreds of millions of people, and you get the economy of a rich country. Do the same thing with a person who has the self-esteem of a lemming, and you get a poor country's economy. Economies get strong as collective self-esteem gets higher, which is what is happening now in China and India. And as collective self-esteem erodes, the economy weakens. How do we know that the whole business is completely subjective?
By getting re-acquainted with Plan B, a concept people talk about every day: reality. The word comes from the Latin res, for "thing," so re-ality simply means "thingness" in the sense that we perceive something with our senses, and we agree that if it looks, walks, sounds and feels like a duck, that's what it is. The buyer and seller of the duck agree on a price that can change from day to day not because there's anything different about the duck itself, but because the buyer and seller have different estimates of what the duck is worth. So -- if we consider how economies go up and down and flush and flat, like the price of a duck, it's clear that an economy isn't in the things themselves. It's in what the people think about what the things are worth. What happens in an economic crash? All of the things that were there the day before -- all the plants, animals, people, buildings, vehicles, tools and equipment, all the food, clothes, toys and everything else -- are still there, except for some organisms and objects that have crashed, burned, passed away or skipped town overnight. Almost everything is still there. Hardly any thing has changed. What has changed is the people's opinions, their value judgments about the things, so that those who were singing "We're in the money" yesterday are asking "Brother, can you spare a dime?" today. All that has changed is that the optimistic abundance consciousness we had a day ago has now dropped through the floor, into poverty consciousness that is far more desperate because everybody seems to be feeling it.
So it's evident, is it not, that the way to avert economic trouble is not to buy into the idea of it? It's also evident what must come now as billions of people who are stuck in fear, and in a blindness to their own intentional power, will surely suffer an agony of believing that they are losing much, even losing it all. Those who live generally in the key of love will have a very different experience. Many of them are already living with fewer possessions in simple, more communal eco-consciousness. They know that having less to lose is not the point at all, when the main ideas are gratitude for what one has rather than in dread of what one may have to give up; detachment, so that one's own value does not seem to depend on what he does or does not have; and the clarity that many traditional Asian and African societies have about what is and is not important. Why is the small Himalayan country of Bhutan a more serene place than the stronger, richer countries? Because Bhutan shifted its standard of national value radically some 20 years ago from Gross National Income, Products or Resources to Gross National Happiness. Is the GNH index likely to help the Bhutanese get through the next five years a lot more easily than most people on our planet? Certainly. Tashi delek.
It will all be so much more workable for those who can accept, unlike Rumi's worried white cow, that what one needs to live is there, always has been there and always will be.
There is a small green island where one white cow lives alone, a meadow of an island.
The cow grazes till nightfall, full and fat, but during the night she panics and grows
thin as a single hair. "What shall I eat tomorrow? There's nothing left!" By dawn,
the grass has grown up again, waist-high. The cow starts eating and by dark the
meadow is clipped short. She's full of strength and energy, but she panics in the dark
as before, and grows abnormally thin overnight. The cow does this over and over,
and this is all she does. She never thinks, "The meadow has never failed to grow back.
Why should I be afraid every night that it won't?" The cow is the bodily soul. The
island field is this world where that grows lean with fear and fat with blessing, lean
and fat. White cow, don't make yourself miserable with what's to come, or not to come.
["A Small Green Island," from The Soul of Rumi]
Welcome to the island. Enjoy the grass. There's so much of it. Keep Holding That Frequency.


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Copyright 2007 Dan Furst. All Rights Reserved.